Uncertainty and high costs fuels housing dilemma for elderly
Up-front fees of up to $1.4 million to access an aged care facility are adding to the already complex decision facing elderly Australian, an advice group believes.
Following the publication of the Productivity Commission's Housing Decisions of Older Australians report, Dixon Advisory managing director financial advisory, Nerida Cole, research by the group provided an eye-opening picture of the costs of getting into residential aged care.
Dixon Advisory's research found the retirees in NSW faced up-front fees ranging from $300,000 to $1.4 million to access a room at an aged care facility in the state.
"For many retirees the uncertainty around future health and care costs creates significant worry and it is not surprising that the Productivity Commission found people continue to save in fear of these future costs," she said.
Meanwhile, the head of the Actuaries Institute's housing working group, Catherine Nance, called for "some smart thinking is needed about how to remove impediments to allow retirees to make better use of their housing wealth".
"This is particularly so due to doubts about the ability of superannuation to provide a sustainable and comfortable income for most Australians over the life of their retirement given increases in longevity risk whereby many Australians may outlast their savings," she said.
"The Institute engaged with the Productivity Commission early on as it laid the groundwork for its report into an area which is complex and potentially fraught for policymakers and consumers.
"The recommended policy changes aim to remove some of the impediments that constrain older Australians from accessing part or all of their housing wealth, if and when they require it, to improve their standard of living in retirement."
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