If only the answer was simple! But the fact is that the answer varies due to a range of factors, including your lifestyle aspirations, personal health and family commitments. But regardless of how much you have put aside, there’s a significant potential cost in retirement that is often not considered, and if ignored, it can potentially undermine your retirement plans - aged care.

None of us want to imagine a time when we are no longer able to look after ourselves without assistance. But the reality is that around one quarter of our retirement may be “frailty years”, where help is needed with the activities of daily living,  generally after the age of 80.*  Planning ahead for this time will potentially allow you to maintain greater control of your life, so that your choices – for example, home care versus residential care – can be respected. But it all costs money.

Lifestyle spending generally tends to reduce as we progress through retirement. However, on average, expenses can ramp up again during the “frailty years”, and the last three to five years of life in particular. It is during this phase of our lives that we are more likely to have some form of disability caused by ageing, which in turn increases the chances of us becoming reliant on others for our daily living. 

Increasing life expectancy and quality of care expectations are also putting greater pressure on income needs in the later phase of retirement.

Because aged care is expensive, the government subsidises some, but not all, of the costs. This is based on your assessed level of income/assets. Access to capital or income at this time may allow you to have greater choices and control over the quality of your care, which is why planning for the cost of future aged care is important to include in your retirement planning, and long before a crisis arises.  

Having a financial plan in place that clearly captures your goals, preferences and financial strategies, is a great way to keep you on track throughout all phases of retirement. 

If you want to review your retirement plans and discuss how to start planning for your “frailty years”, make an appointment to speak with an adviser today.^  

TALK TO AN ADVISER