Affordable advice ‘central’ to aged care confidence

In its latest research, AMP said advisers are frequently fielding questions regarding aged care, many of which are largely related to costs, government benefits, and how to best utilise their assets.

The research found that one of the most common questions asked by clients included how they can minimise aged care fees while optimising their social security entitlements, while others required guidance on how these benefits could impact them as they move into aged care.

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Advisers also reported that many clients were simply asking what aged care would cost and if they could even afford it, highlighting the desperate need for advice in this area.

Unfortunately, as the adviser shortage persists – a problem even more apparent among aged care advice specialists – many Australians are left without the necessary guidance.

As a result, AMP found that four in five Australians aged 65 and over didn’t feel prepared to transition to aged care, seven in 10 were worried about the cost of care, and around one in two didn’t know what government assistance would be available for aged care – concerns largely born out of a lack of guidance.

Those entering aged care also express considerable concern regarding the impact it would have on their children with one in three noting concerns about the cost of aged care on their children, while three-quarters expected aged care to diminish their wealth and, subsequently, their children’s inheritance.

AMP group executive, super and investments, Melinda Howes, said the findings highlighted the lack of financial confidence and understanding Australians have when it comes to navigating the aged care system.

“More affordable and accessible financial advice is central to building this confidence, and in helping demystify the nuances and complexities of our retirement system, including how the aged care system interacts with the pension and family home,” Howes said.

“The onus is also on the financial services industry to develop new and innovative retirement solutions which 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.

“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.”

AMP director of retirement, Ben Hillier, explained that financial advisers and the wider financial services industry had an important role to play in building clients’ confidence in their ability to finance their retirement and cover aged care as 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,” Hillier said.

“It also includes better access to financial advice, improved financial literacy at all ages, and a simplified retirement system. Relocating to an aged care facility, gifting and inheritance are all areas where an adviser can make a meaningful difference to more Australians in and near retirement.”