Baby boomers' retirement plans are being impacted by rising aged care costs, director of FMS Group, Christine Hornery, believes.
Hornery said many baby boomers have based their retirement plans on the belief that they will receive an inheritance, however, this belief may be unfounded, she warned.
"I believe the cost of aged care, even after the introduction of the Living Longer, Living Better reforms this month, may eat its way into those inheritances, potentially putting baby boomers into a worse financial position in retirement than their parents," she said.
"The minimum daily fee for aged care from 1 July 2014 is $46.50 per day. Along with other costs that may be incurred, for example accommodation payment or contribution, means tested fee, additional services fee, etc… chances are expected inheritances are going to be less than baby boomers expect or, given we are all living longer, may be so long coming they do not arrive when they are needed most."
Hornery said that baby boomers needed to push the thought of inheritances aside when planning their retirements and think strategically about how to fund their futures themselves.
"I have met people who have accessed their superannuation as soon as they retire, spent the whole amount in two or three years — whether it be on things they expected or not — and had to apply for the aged pension," she said.
"That is obviously not a grand retirement plan, for them or for the country, but it is the reality."
