Time to read : 3 Minutes
A government report into the sustainability of the aged care system has found that wealthy people should pay more for aged care to ensure those with fewer means can also access care services.
In the face of an ageing population, it’s expected that in the next 40 years the number of Australians aged:
65 and over will more than double
85 and over to more than triple.
With life expectancy increasing, the aged care sector is not in a financial position to meet the demands or invest in Australia’s future aged care requirements.
Those able to contribute, should contribute?
A key issue identified in the report was as the proportion of Australians aged 65 and over grows, the younger generations – the number of working taxpayers – are shrinking.
The report says it’s clear that with more people needing aged care, and fewer people working to pay for it, that older Aussies will have to fund more of their aged care needs privately, specifically a means-tested co-payment from super.
“The superannuation system supports Australians to save for retirement,” the report reads.
“The government’s proposed objective for superannuation is ‘to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way’. Income from superannuation should be drawn down in retirement to cover health, lifestyle, other living expenses and aged care costs.
“As a result, there is more scope for older people to contribute to their aged care costs by using their accumulated wealth than in previous generations.”
If your parents pay more for aged care, you pay too
Let’s consider for a moment what this means to you if this proposal comes into effect?
You may end up watching your inheritance dwindle away in aged care fees. The longer your parents require aged care, the less in the kitty.
Would you rethink your approach to super? Would there be an incentive to work hard, pay taxes, save for your retirement if you knew you had to pay more for your future aged care?
Would you consider spending your retirement living dollars, reducing your wealth to avoid paying more for aged care… when the time comes? This is likely to have a knock-on effect for your children’s inheritance.
While the proposal, amongst others outlined in the report, are currently just recommendations, asking the ‘wealthy’ to foot the bill will certainly be controversial.
The bottom line:
With estimates that Australia’s ageing population will continue to grow at an astonishing rate, our aged care system simply won’t be able to deliver.
While addressing options with recommendations may demonstrate the government is doing something about it, we’ll have to wait and see if well off Australians… and the generations to follow, will pay more for it.
Go Deeper:
What you really think of the aged care taskforce report
