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There are three phases in retirement, active, quiet and frailty. It’s particularly important to plan for this ‘Frailty Years’ stage Here we outline the most important considerations when planning for these years and cover Government assistance, through to strategies for retirement planning. 

Ignore the third stage of retirement planning at your peril

The Golden Years… a time of leisure, travel, and more time with family and friends. This is likely what springs to mind when someone mentions retirement.  However, did you know that your retirement years are typically split into three main stages – the active years, the quiet years, and the frailty years?

While most will hope and/or plan to spend up big in the active years, it’s important to ensure you also plan on having adequate funds set aside for the frailty years. These are the later years of retirement where health and functional capacity may begin to decline, and additional care and support may be required.

While the Government contributes towards health and aged care costs, it is crucial that you also plan for these expenses.  

When putting together your retirement plan, particularly planning for the frailty years, there are some important considerations.  

Health Care 

Health expenditure is predicted to increase per person from $7,926 in 2020 to $9,594 in 2035.

This can represent a large portion of the cost of living for older Australians and is an essential expense that needs to be factored into spending throughout the retirement stages.  

Quality of Care 

While you might be familiar with the amount you need for a comfortable standard of living, you will also need to consider the amount you might need for a comfortable standard of care as well.

Factoring in the quality of lifestyle you would expect for the frailty years will be critical to determining your expense needs for these years. 

These expenses might include in-home care (i.e., grocery delivery, meal preparation, home maintenance and cleaning), home and/or motor vehicle adaptations, residential aged care etc. 

Aged Care 

Aged Care services come in many different forms, from home care and transitional care to respite and permanent residential care.  

While most older Australians prefer to continue to live at home, the likelihood of needing to move into residential aged care increases throughout the later years of retirement. 

According to the OECD (2020), 18.4% of the Australian population aged 80+ were using long-term care provided by an institution (excluding hospitals).  

Residential aged care facilities can come with a range of costs, including: 

  • Basic daily fees;
  • Means-tested care fees; and
  • Accommodation costs.

While the basic daily fees are a set amount paid for by all residents, the means-tested care fees and accommodations costs are subject to an assessment of your income and assets.  

Longevity Risk 

Longevity Risk is the risk of outliving the average life expectancy, which may require greater levels of retirement assets than originally planned for.  

A good way to allow for this is to include a life expectancy buffer, by adding additional years (i.e. 5-10) to your life expectancy when calculating your retirement expense needs. 

Strategies for Retirement Planning 

There are several financial planning strategies available that can help retirees to get the most out of their retirement assets. These can include:

  • Contributing to superannuation, including downsizer contribution strategies. 
  • Using account-based pensions and annuity products to structure retirement assets.
  • Strategies to optimise age pension entitlements, including prepaying funeral bonds.
  • Aged care planning, including the best way to fund care costs and how to best manage the family home. 

If you’re not sure how to best approach your retirement plan, reach out to us today.


The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional. We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.