A new study from Challenger and National Seniors Australia (NSA) has found alarmingly low numbers of Australians (14%) are financially prepared for aged care.
Following this, another 38% had thought about aged care costs and that such planning was higher amongst those of a more mature age, higher education and greater wealth.
Some 75% of respondents who had exposure to aged care, for example through a relative, were more likely to plan financially for care which suggested that people needed better information and greater simplicity in the financial requirements to help with planning.
National Seniors chief executive and director of research, Professor John McCallum, said it was critical that aged care costs were built into later life financial planning.
“People are hesitating because of the negative media around nursing homes or simply denying the fact that they will need care and will have to pay for at least some of it,” he added.
“Having financial resources to access aged care and support services of choice can greatly increase retirees’ quality of life and independence. A financial plan that includes aged care also relieves stress and anxiety, either for family members or the older person themselves.”
Challenger's head of retirement income research, Aaron Minney, said that aged care planning did not have to be necessary onerous and could provide peace of mind for later life.
“Like other aspects of retirement planning, people find it hard and often confronting when forced to consider the fragility of old age, leading many to be caught off guard by unplanned aged care costs. Making a plan ahead of time can help ensure out of pocket costs are covered and provide confidence that you’ll be well looked after as you age.”