When people talk about retirement advice it is usually focussed on the critical question of have I got enough to support my lifestyle after the regular paycheck stops.
But the reality of retirement is that the spectrum of advice and services needed for a successful retirement is much, much broader than the question of savings and investments.
For many people navigating their way through the social security system and the aged care system – and how they interact with each other – has the potential to make superannuation seem relatively straightforward.
It is not surprising that superannuation, social security and aged care are not well integrated despite the common purpose of helping provide for our health and well-being in our older years. Super is the relatively new kid on the block with the super guarantee introduced in 1992 when Paul Keating was Prime Minister. Our social security system, in contrast, was legislated in 1908 with the Commonwealth government system replacing state based pensions.
Each system comes with its complexities, to a greater or lesser extent depending on your personal circumstances. Most retirees – around 70 per cent – will be eligible for a part pension, increasingly so as super account balances grow and many financial advisers are adept at navigating the interaction of both systems.
The good news is that more of us will require aged care services because we are living longer. Life expectancy for a female is now 87.3 while men on average will live to 84.6. Medical technology and general advances in health mean that continues to rise. A baby girl born today can realistically expect to have a good chance of making it to 100 plus.
When you make it to age 65 – the traditional benchmark age for retirement – the chances of you needing aged care services is almost 70 per cent for females and about 48 per cent for males according to the 2011 Productivity Commission report Inquiry Report Caring for older Australians.
When people are in the early stages of retirement they are often in relatively good health and enjoying having the time to pursue some of those life interests that were not possible in the world of full-time employment.
But as we age the chances of health issues or disabilities and cognitive decline naturally increase. Some recent family experiences highlighted the need to have plans in place – or at least conversations around likely next steps and personal wishes.
The alternative is the risk that the sudden onset of medical issues can mean conversations around aged care are done in an emotional, potentially highly stressful and financially challenging environment.
The financial impacts can be significant – a good place to start is the fee estimate calculator on the Myagedcare website – while a more fundamental challenge can simply be accommodation availability depending on the health circumstances.
Written by Robin Bowerman, Head of Corporate Affairs at Vanguard.
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