A household budget is the single most effective tool to maintain control of your cash and stretch your nest egg to last as long as you need it to.
By the time we reach our seventies most of us have a reasonable idea of regular living expenses. What’s less certain is how much we should set aside for future aged care costs. It’s an issue that can be a source of stress for retirees.
Government-funded aged care accommodation is available so it shouldn’t form a cloud over your retirement. Nonetheless, aged care is something worth considering long before it’s needed. Rushed decisions can be costly, and seeking professional financial advice at a reasonably early stage can protect your wealth and minimise care costs.
Years of fulfilling retirement ahead
However the reality for many retirees is that aged care could be some time away. So, how do you extend your nest egg over what will hopefully be a lengthy and fulfilling future? A simple yet remarkably effective tool for the job is a personal budget.
A budget planner makes it easy
A budget plays several key roles. It will highlight major costs to allow for – like household insurance or utility bills. It will reveal whether you are dipping too freely into your pool of investments, and it will also highlight areas where cutbacks can be made to extend your nest egg a little longer.
A common pitfall is underestimating the amount we spend on seemingly small purchases –like a few lunches with friends or some treats for the grandkids. These are the things that make retirement enjoyable but it’s also wise to ensure they aren’t exhausting your funds at too rapid a pace.
Ask for help to keep you on track
Of course making a budget is one thing, sticking to it is often the hard part. Ask a friend or family member to help you stay on track. Or appoint a financial adviser to offer you guidance here, providing insights into whether your investments are on track to last the distance.
Budgeting for aged care costs
Aged care accommodation typically involves two types of costs – entry fees and ongoing charges.
Entry fees vary depending on the type of care. Low level care often requires an upfront bond, with high level (nursing home) care more likely to involve an annual charge. Both types of care facilities are required to offer some places to those who cannot afford to meet the cost of accommodation themselves.
Ongoing fees are charged to cover daily living costs. A basic daily care fee will usually apply plus income tested fees. Self-funded retirees may be asked to pay a higher rate.
For current details of aged care costs visit Estimate fees for aged care services and please speak with your financial adviser to get a better understanding of the costs involved.
Disclaimer: Information in this article is based on current regulatory requirements and laws, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on this document.
This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.