Factor in aged care costs
If you are working out how much you need to save for retirement, don’t forget the costs of aged care. This is not just the cost of residential care; it should also include care in the home or support services to help you live independently as you age.
Factoring in the costs of aged care is becoming increasingly important with the emergence of home care, increasing longevity and the rising incidence of dementia. Having the capacity to pay for services increases your range of choices and your ability to retain some independence.
The costs of aged care have been accelerating and are likely to continue to increase at a rate higher than inflation. Home care costs can be difficult to predict and can vary from $100 to $5000 a week, depending on your personal needs and family circumstances.
Access to government subsidies helps to drastically reduce the cost to you but having adequate savings opens up the choices and ability to control the level and type of care received.
If you ignore the costs of aged care when planning the adequacy of retirement savings, you may fall short of predicting your real retirement income needs and run out of money too early.
Assyat David, director, Aged Care Steps