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Planning for aged care costs: Hesitancy, ignorance and denial

Planning for aged care costs: Hesitancy, ignorance and denial

24 August 2021
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To better understand seniors’ willingness to financially plan for age care, we analysed responses from over 5,000 older Australians 50 years and over who took part in the 2021 National Seniors Social Survey.

Summary

Executive Summary

Age care costs are not typically considered as important components of planning for a financially comfortable retirement. Retirement comfort is defined predominantly by lifestyle factors, with age care a distant and unwelcome possibility.

Australia's age care system is complex. The financial contribution by individuals to their own care is difficult to determine and age care is not considered a desirable commodity, especially given the recent distressing findings by the Royal Commission into Age Care.

We argue that a shift in focus is needed so that age care costs are built into later life financial planning. Having the financial resources available to access age care and support services can greatly increase retirees' quality of life and independence. A financial plan that includes age care also relieves stress and anxiety, either for family members or the older person themselves when navigating the age care system in times of crisis.

To better understand seniors' willingness to financially plan for age care, we analysed responses from over 5,000 older Australians 50 years and over who took part in the 2021 National Seniors Social Survey.

Participants answered multiple response questions about their experiences and expectations of needing age care, on budgeting and on financial planning, including planning for age care costs. They also provided information about their social and demographic characteristics.

Findings showed:

  • 38% had thought about age care costs, but only 14% had planned for them.
  • The likelihood of age care cost planning did not differ by gender or partner status but was strongly associated with older age, higher education and greater wealth.
  • Regular budgeters were 75% more likely to have planned for aged care costs.
  • Investigating future age care options was associated with being three and a quarter times more likely to have planned for age care costs.
  • Being previously exposed to the age care system through a family member or friend was associated with being 75% more likely to plan for age care costs

Most people believed improvements to the age care system should be funded by the Government through general revenue or an age care levy.
In summary, only people with the means, information, and motivation were more likely to plan for the cost of age care in later life.
We suggest strategies to reduce the hesitation and ignorance about planning for care and make inroads into the denial that some have about risks in this life phase.

Planning for aged care costs: Hesitancy, ignorance and denial

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National Seniors is a not-for-profit membership and advocacy organisation that gives older Australians – working and retired – a strong national voice. We tackle issues such as age discrimination, mature age employment, the Age Pension, social inclusion, cost of living concerns and more.

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