Planning for aged care living is complex and can have more pitfalls – financially and emotionally – than planning for retirement, says Equity Trustees’ Anna Lawton.
“Lack of planning for aged care needs can cost clients unnecessarily if they are not well advised, which is a challenge for financial advisers as well as an opportunity.
“Knowing how the rules and regulations affect one’s financial position is as important in planning for aged care as it is for superannuation, and lack of knowledge can come at a huge financial cost.
“Financial aspects are not the only issue as, unlike retirement planning, people generally do not want to consider the possibility of aged care, much less to plan for it.
The challenge for financial advisers is to get retired clients to think about the real possibility they will need aged care in their later years, Lawton says.
Financial advisers may have a trickier time engaging the client on aged care, as the situation is different to talking about superannuation – because clients look forward to retirement and will seek advice.
“With aged care planning, clients are less willing to discuss their needs – even with their family. Indeed, they are often in a state of denial. They may expect arrangements to be made with their family that the family isn’t aware of and are not planning for, or they may simply become incompetent to make decisions,” says Lawton.
“So sensible planning starts a long time before the need and advisers have a major responsibility, as well as a professional opportunity, to help clients face their needs as they age and understand the options that will be available for them.”
Equity Trustees have a service to help advisers and their clients find suitable aged care facilities, and can help structure finances for the move into aged care.
Pre-planning is essential to make sure people comprehend the facility options available to them and have a financial strategy in place, Lawton says.
“Deciding on an aged care facility that is at the standard you want, or can afford, can be difficult as there is not always a bed available at the time of need.
“It also means they don’t end up having to make a last-minute decision about aged care when their doctor tells them they can no longer stay in their own home.”
This article first appeared on the Wealth Professional website. To subscribe or find out more, please click here.
