One in four aussies to spend inheritance on aged care

Nearly three-quarters of Australians would sacrifice their inheritance so their parents and grandparents can spend the money on aged care instead, new research has found.

Australians are dying wealthier than ever and have gifted almost $1.4 trillion — or about $67bn a year — in inheritances over the past two decades, according to the report.

But new polling suggests most millennials and members of Gen X would forgo this if it meant their older relatives could have a better quality of life in their twilight years.

Of those who responded to the nationally-representative survey of 1,000 people of all age groups, about half said they expected to receive an inheritance, and 73 per cent said they’d be willing to miss out regardless.

Australian aged care software provider CompliSpace released the survey on Tuesday along with a major report into aged care funding as the Albanese government puts the finishing touches on its first full federal budget.

The compliance and governance software maker’s chief executive, David Griffiths, has called for a “national conversation” about how aged care is funded.

He said he wanted to revive the debate over increasing how much people pay out-of-pocket for their aged care.

“The inescapable fact is that Australia is experiencing an aged care funding crisis and is reaching a tipping point,” Mr Griffiths said.

“There are limits to how much taxpayers can provide to support older Australians who can fund their care.”

The report argued that co-contributions from aged care recipients would help the sector improve and expand its services and allow the government to direct funds towards subsidising the vulnerable older Australians most in need.

Mr Griffiths said it was no longer possible for taxpayers to fund the care of wealthy older Australians who could afford to pay for it themselves.

“Co-contribution models are a way to both make that possible and to salvage aged care from becoming an unsustainable industry that fails older Australians,” he said.

The paper referred to research by the Productivity Commission, which found the average Australian inheritance today is about $125,000.

The recipient is about 50 years old, close to peak earning capacity, and already established in a home they own.

Thirty-eight per cent of respondents to the CompliSpace survey agreed older people should sell their homes if needed to fund their aged care.

Additionally, 47 per cent said they planned to leave an inheritance of their own despite supporting their relatives to spend their own money on aged care.

The report also shone new light on the inheritances Australians give and receive.

Most people — 27 per cent of those surveyed — expect to receive between $50,000 and $250,000, with 5 per cent expecting an inheritance of between $1m and $2m.

NSW families bequeath the most wealth, with 19 per cent of respondents who had received an inheritance having assessed its value between $500,000 to $2m.

Eighty per cent of South Australians who have benefited from an inheritance received it from their parents, by far the highest proportion in the country – and they are also the most likely to put their heritage into superannuation.

Canberrans are the most likely to receive a cash inheritance — 61 per cent — and half of ACT respondents said they would leave their assets and savings to their partner.

In contrast, 42 per cent of Tasmanians said they would leave savings to their children, whereas 28 per cent said they’d leave theirs to their partner.

Eighty-four per cent of Western Australians and 86 per cent of Tasmanians supported their parents and/or grandparents using savings to fund their retirements, making them the state-based cohorts most supportive of the idea.

Sixty-six per cent of Northern Territory residents and 69 per cent of Tasmanians expected that older people would fund their own aged care, more than in other jurisdictions.

Prime Minister Anthony Albanese made aged care reform one of his centrepiece election promises.

He used his reply speech to the Morrison government’s last federal budget in March 2022 to pledge an additional $2.5bn to fix the troubled sector.

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