– by Michelle le Roux

It’s fun to be young and have big dreams. We leave school and the security of living under dad’s roof; we start working and have a lifetime of salaries and bonuses ahead of us. Retirement is far into the future – after all 40 years is a long way away. But between building family, pursuing a career and starting businesses, those 40 years sneak up on you fast.

Most people would like to continue with the same level of income when they retire. It’s a good indication of what one needs to aim for in terms of retirement savings. But this is life, and uncertainty is something you can bank on.

While it’s reasonable to assume that you will more or less carry on with the same lifestyle between age 65 and 80, you will reach a final life stage where your expenses change dramatically. For some it means less travelling, or not replacing your car again, or lower household expenses because your health limits your lifestyle. If you think about it today, you probably expect to spend less on your lifestyle at 80 than you will at 65 – although medical costs could increase significantly.

For most people aged 80 or thereabouts, this phase also involves going to that scary place called “the old age home”, where our grandparents believed they were sent to die. Except that today most people live there happily for another 10 or 20 years, long after frail care became a necessary part of their lives. This season brings financial uncertainty: it’s a second wave of “have I saved enough”? This is especially true if both partners enter frail care at the same time.

At Foundation Family Wealth, we face these scenarios and questions more and more frequently. For this reason I decided to investigate the actual costs of the final life stages. There are many different types of retirement facilities in our country and monthly costs vary substantially. My aim was to determine the cost of a reasonable option, where one of Foundation’s clients would receive adequate care and happily live out their last years in comfort (but not necessarily exorbitant luxury).

I assumed that the requirement is the rental of a one bedroom apartment in an old age home (in the assisted living category) in the northern suburbs of Johannesburg and surrounding areas. The costs for this area compare well to popular retirement areas in the Cape, such as Hermanus.

The monthly cost for such a unit (60 – 69sqm) starts at R19 000 – R22 000. It includes all meals and refreshments, laundry and cleaning of rooms. It also includes water and electricity usage and any applicable rates and taxes.

Frail care is suitable for patients who are either physically and/or mentally frail. The monthly cost (in a private room or ward) starts at R21 000 per month, which includes full accommodation but also 24 hour nursing assistance. If a patient develops dementia or Alzheimers you may expect the cost to increase, although there doesn’t seem to be an average cost for this added service as many facilities view this on a case-by-case basis. In certain instances there is no additional levy for mental frailty.

Frail care at home is likely to be upwards from R18 000, because at least two live-in carers are required. This monthly cost can be considerably more expensive where the patient suffers from dementia or Alzheimers.

Cheaper options for more basic accommodation in the same area does exist. Most retirement villages have a variety of care units, from independent properties and assisted living, to old age care, semi-frail and frail care, and there is a significant variance in cost amongst these different categories. Facilities and personal preferences differ. Your circumstances will determine the best option for you and your partner.

Now that you have a ball-park idea of what is potentially waiting for you after age 80, the question remains whether you will be able to afford this cost, most likely for an extended period of time?

At Foundation, we strongly believe that cash flow modelling is imperative to help our clients understand their financial outlook. Speak to us if you have immediate concerns. Planning ahead is important, knowing the numbers empowers us to face any fears we might be facing about the future. We’re never too young to start either. Just yesterday I was 40 years away from retirement, and this morning I realised I am already more than a third of the way there!

Foundation Family Wealth is an Authorised Financial Services Provider