"I've noticed the last few weeks there has been a lot of attention on how much it is going to cost to fund long term aged care later in life due to the funding changes the government has introduced. What can I do to prepare for these expenses for later in life?"
- Question from Jason in Ashfield, NSW
Top answer provided by:
Maritza Kriel
Hi Jason
Great question!
The government has indeed introduced several Aged Care reforms, which will apply from 1 July 2025. Overall, the changes seek to ensure that those who can afford to contribute towards the cost of their care do so. Government support will be targeted at those who are not as financially secure. The changes also seek to increase investment in the aged care sector to improve the facilities available to residents.
Please note that private aged care facilities are not governed by these rules:
Awesome work on starting to think about aged care early – preparing financially for this significant step is just as important as selecting the right type of care option later in life and may provide you with more flexibility.
Now that you are aware of the general cost of aged care, start by:
Educating yourself on your own personal finances.
Do you need to start saving more of your income, put more money towards superannuation or possibly pay off debt?
Create a budget and stick to it. Generally, when people start paying more attention to their spending, they find ways to cut back on unnecessary spending.
Researching investment products such as annuities or aged care specific investment bonds to help fund aged care, should you have sufficient savings. Ensure your assets are protected, returns are in line with your risk profile and objectives and that fees are minimised.
Structuring your assets and income optimally to maximise your eligibility for government support, if applicable.
Researching finance options should you be unable to save enough cash.
You don’t always have to sell your family home or downsize to fund aged care expenses. Many Australians use reverse mortgages or home equity releases – which is useful to know should you need it in future.
Jason, aged care planning can be a challenging topic to think about and the system is quite complex to understand. However, planning ahead for this significant step later in life should ensure your wishes are respected, reduce stress for you and your family and enable you to increase your quality of life and independence.
As I am not familiar with your personal situation, I hope above provided you with sufficient general information to take into account as you start your planning journey. Know that there are plenty of aged care specialised financial planners who may be able to assist if needed. For more information, we also have a guide to aged care published here.
Best wishes,
Maritza
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