Home / Retirement / Seniors ‘fearful’ cost of aged care will make them a burden on their children

A new research report finds many older Australians are deeply worried about the cost of care and don't understand how it interacts with the aged pension. For most, the best solution is to remain in the family home.

Older Australians are fearful about moving into aged care, with the majority (60 per cent) preferring to remain living in the family home and half wanting to receive care in the home.

They are also deeply concerned about how moving into aged care will diminish their wealth and make them a burden on their children.

These research findings, part of a report commissioned by AMP (ASX:AMP), highlight the perceived challenges facing the growing number of Australians heading into retirement.

The research also reveals that four out of five Australians aged 65 and over don’t feel prepared for the transition to aged care, while seven out of 10 are worried about the cost of care.

Another key finding is that half are unaware of what government assistance is available to them for aged care, reinforcing the message in previous government reports showing older Australians find the aged care system difficult to access and navigate.

AMP’s research, which surveyed 2,000 Australians aged 50 and over and under 40 about their attitudes to retirement, aged care and transferring intergenerational wealth, comes in the wake of the new Aged Care Act aimed at supporting Australians choosing to stay at home as they age.

Melinda Howes (pictured), AMP group executive, super and investments, says these insights highlight the financial worry and lack of understanding many older Australians have about aged care, including its cost, how they will fund it and how it interacts with the pension.

“The government’s aged care reforms are an important step towards helping support the growing number of older Australians choosing to retain their independence, and the financial services industry needs to do more,” she tells The Golden Times.

“It’s critical we continue to work with government and regulators to help take these aged care financial worries off the table for retirees, and allow them, with their families, to focus on their physical and emotional well-being during this phase of life.”

She says it’s critical to begin building financial confidence during the transition into retirement, giving older Australians greater choice when they reach this stage of their lives.

“That means instilling a peace of mind that their savings and income will last and understanding the available options for receiving care.

“This would not only provide comfort in the knowledge that they can remain financially independent as they age but unlock a better quality of life in the early and active years of retirement.”

She adds that the onus is on the financial services industry to develop new and innovative retirement solutions that provide greater lifetime income certainty and make it easier to downsize or unlock equity from what is most Australians largest financial asset – the family home.

Ben Hillier, AMP director of retirement, says Australia is leading the way in developing new solutions that maximise and provide assurance on lifetime income for retirees.

“But as this research highlights, our industry must continue to innovate to provide Australian retirees with the financial confidence. This means removing any financial concerns they may have about aged care and providing confidence that they’ll be able to fund the cost if needed.

“This can be achieved through lifetime income solutions that will help more Australians look forward to a better standard of living and a higher rate of ongoing income in retirement. It also includes better access to financial advice, improved financial literacy at all ages and a simplified retirement system.”