One-third (33%) of us expect our future care to cost less than $200 per week, according to the study released this week by Absolute Care & Health and researcher firm McCrindle.
They asked 1,000 Australians aged 50 and over about their expectations – including in-home care – and most expected the Government to chip in, with the top three funding options being government payments (47%), superannuation (41%), and cash savings (30%).
Only 21 per cent plan to sell the family home to pay for care, while one in six (18%) expect the Government to fully fund their future care.
It’s an interesting snapshot – and one that highlights the wide gap between our expectations of aged care costs and the reality.
Tallying up the numbers
We did some number crunching based on the current costs for an aged care home.
Everyone pay the basic daily fee of $50.16 – that’s $351.12 a week or 75 per cent of the Pension. That’s the bare minimum you’d pay.
Then you have your Refundable Accommodation Deposit (RAD). In Sydney, this can range from $400,000 up to $1.8 million – or more.
Add in the assets and income means-tested fee – this is charged depending on your income and assets and caps out annually at $62,498.66. Only people of low means with assets of less than $165,271.20 are exempt.
Then there is the service fee if you want additional services such as alcohol, cable in your room, special therapies such as massage, a wider choice of meals, and facilities likes gyms, pools and cinemas – and this is not always an optional fee.
We calculate the conservative average you’d pay for a Sydney aged care home – based on a daily fee of $50.16, a Daily Accommodation Payment (DAP) of $106 per day (or RAD of $650,000 converted to a DAP), means-tested fee of $50 and a service of $40 – is $1,727.85 a week.
Fee increases on the cards
It’s also likely that these charges will increase in the future. Last year David Tune recommended a range of measures to the Federal Government including increasing the cap on the basic daily fee, to $100 a day (those with less means would still be capped).
Most have yet to be followed up on, but with Health Minister Greg Hunt pledging last week to increase funding to the sector, they are on the cards.
None of us like talking about our care needs as we age – but it’s a conversation we need to have, as this latest research highlights.
Only nine per cent of respondents had a financial or savings plan for their future care, while just three per cent had sought financial advice.
With more of us living longer and relying on in-home and aged care, it is worth being prepared – and educating yourself about the potential costs involved.
You can find out more about your care options at agedcare101 here.