One inescapable truth of the near future is that the world, and in particular Australia, will have a much higher population of elderly people. As things stand, the government’s aged care contribution is a fraction of what will be required in 25 to 30 years time.
ELRI has developed a collection of insights into public and private funding options for aged care. Some of the options that are available include:
- An aged care levy
- Tax deduction vs. rebate
- Filial responsibility laws
- Return of death taxes
The strategy document discusses possibilities such as an Aged Care Levy Surcharge (ACLS) in which each child earning over $100,000 household income would be required to pay an ACLS of 1.5% where they have a parent in subsidised care, although this could provide little disincentive to go entirely private.
Also discussed is the median household net worth of Australians over 75 years of age which is estimated at $450,000. Does this open up the potential for death taxes?
Showing an interesting comparison of these and other likely solutions, the one unavoidable fact is that in future, some private funding will be obligatory.Download PDF: ITOW Affording Retirement