New data from the Australian Seniors 2021 Mindset Shift survey has revealed just how Australians over 50 years old feel about aged care following the revelations and challenges of the last 12 months.
According to the data, 43% of surveyed people over 50 said the pandemic changed their perspective on aged care, and a whopping 80% said they were worried they hadn’t saved enough for their retirement. On top of that, one quarter of respondents said they struggled to pay their bills, and 10% said they’d delay retirement following COVID-19.
For many, the cost of aged care and life after retirement snuck up on them. Suddenly they were faced with extra costs and financial responsibilities that they spent much of our lives thinking of as “in the future”.
The cost of aged care varies from person to person, and is mostly based on the level of care required and means testing of the person entering care. Costs also change based on the individual’s choice of care provider and what services they need.
The average daily cost of care is around $50 per day, which works out at roughly $20,000 per year. This daily fee pays for everyday care, like meals, laundry and cleaning. Additional to this, there is a means tested care fee, which can be anywhere up to around $250 per day.
Furthermore, the resident is also expected to pay for their room, if they can afford it. This is paid either in a lump sum, which is refunded once the room is vacated, or through daily payments – or a combination of both.
“And that potentially is one of the reasons why people are reluctant to draw down on more capital in retirement, because they fear that they might get sick, or they might need to go to aged care. And they don’t understand, because the systems are complex, just the extent to which they can rely on the government to help them with that.”
“We all know there’s going to have to be substantial increase in funding in aged care – very substantial increase in funding,” Mr Callaghan said.
“But it’s not just funding, of course. People want to see better quality in how those funds are being used.”
Increased funding, and increased accessibility of aged care in Australia, is not a new topic. In September of last year, former Prime Minister Paul Keating proposed a HECS-style funding system for aged care to the Royal Commission. Within this post-paid system, the government would advance loans to older people looking to enter aged care, and would help alleviate pressure on waitlists.
Under Mr Keating’s proposal, if the person receiving the loan was unable to pay for it, or their estate didn’t have the finances, the Commonwealth would pay for their care.
“In other words, it’s a contingent loan just like HECS. Like in a HECS loan, if a young person gets a degree and then never works, the loan is not repayable. The same would happen with aged care,” Mr Keating explained at the time.
What do you think about the growing number of older Australians possibly not being in a financial position to afford aged care? Share your thoughts with us.
Many Australians facing later life costs believe they must have many hundreds of thousands of dollars saved to pay for residential accommodation. This is far from the truth.
Too few programs, especially from Government, fail to educate potential residents that their accommodation can be paid daily. Whether that is the better option is not canvassed here, but to give future residents confidence, here are the facts.
The top price for a room is $550,000 (unless special Government approval is given to charge a higher amount). The average period within age care is 2-3 years. To pay daily, an interest rate (currently 4.01%) is applied to the room cost and fixed from the day of entry. The current cost would be $60.42 daily, or $22,055 per annum.
To give reassurance to a potential resident, $110,275 would cover a 5 year period of accommodation.
The future of paying accommodation by daily contributions recently gained momentum as one of the key recommendations of the Royal Commission.
I find it very surprising how a lot of people are not aware that if they require Aged Care and they own a home and no one else was living in the home with them that they would be required to sell it to pay their RAD and that it is paid into their estate when they die.
Hi Katie,
As previously explained, you do not have to sell the former home. Here is an example.
You would have decided not to sell the former home in the past 12 months, with projected property growth of up to 15% for the 2021 year. A $1,000,000 home would be worth $1.15m in that period. Using an aged care loan of $1900 per month to cover the accommodation, the growth in one year would cover 5 years of accommodation
It is very costly to have a member in nursing home as I have not any capital to pay so I have to rely on centreline. All his money from centerlink goes into paying ¹his $ 52 daily it leaves enough to pay prescriptions and clothes and all else he needs. Myself I pay all household bills and expenses on my payment. It’s very tough .I wish husband was never put in a nursing home. As I have problems myself there is nothing I can do.
It’s sad that you feel that way but you seem to forget that the taxpayer is completely footing the bill for your husbands care. All care, food, accommodation etc etc for only 85% of the government pension.
This system protects those that have nothing and that should be praised because we are very lucky to have this option in later years.
It seems to me that some older people believe they “can’t afford” aged care because to do so will require them to sell or rent out their properties and they would rather leave it for their children. However, if you have an asset, it is not unreasonable to be required to use it to fund the costs of care. It’s bad enough that people living in multimillion dollar properties are able to claim the pension. I am all for looking after people who can’t afford to look after themselves but as a younger person, I find it hard to stomach that I am subsidising millionaires and their children!
I am a Nurse involved with geriatric care and aged care. The system is very broken and my experience makes me very concerned for any one approaching their retirement age. And those in aged care or needing services. The beaurocracy is a mess and cold, absolutely has no compassion and just puts people into categories that never fit. Aged care facilities pick and choose according to financial gain rather than need and others are left to the system. I personally do not want to be part of this system when I am older. It’s a mess.