Putting the pieces together
The aged care system is a complicated puzzle of options and processes. Putting the pieces together isn’t easy at the best of times.
But when you’re making tough decisions around living arrangements for yourself or a loved one it can feel overwhelming.
In this blog we outline some key tips to help along the way.
Tip 1 - Talk to an expert
First and foremost remember you don’t have to do this on your own.
An aged care specialist adviser will work with you to make sure you get the best living solution for your particular circumstances.
Use an expert adviser to consider the impact of aged care on any Centrelink payments you may receive, any tax implications – you may qualify for tax offsets, what you can afford, and what to do with your home.
A specialist adviser will model different aged care scenarios so you know when you make your decision, it’s the right one for you.
It’s important to seek legal advice before you sign a contract with a residential aged care provider. Many villages have unusual clauses and a lawyer will go through the detail with you.
Tip 2 - Eligibility
The initial puzzle piece to get right is working out whether you or your loved one qualify to enter into a residential aged care facility.
This is established by an aged care assessment team.
An assessor will visit you in your home to work out exactly what your aged care needs are, and which packages you’re eligible for.
Once you’ve received the assessment, seek advice from an aged care specialist who will outline your options and help with a plan that best suits your needs, both financial and personal.
Tip 3 - Look beyond the front door
Your potential new home may be an architectural masterpiece. But decor and style deliver on one level only.
There are other important aspects of aged care centres which will really impact you as a resident. Things like the staff, the meals, the activity schedule and the allied health services, will make a real difference to your quality of life, so it’s important to look into these too. And don’t forget to ask about the other residents.
Tip 4 - You can negotiate
It’s important you understand the fees that apply to your chosen aged care facility and whether you can purchase additional extra services. But don’t rule out a facility because you think it is beyond your price.
It’s worth discussing your financial situation with the facility manager rather than relying on the advertised price. They may be willing to talk about discounts based on what you can afford. Remember aged care facilities like to try to accommodate residents whenever they can.
You’ll find that the refundable accommodation deposit (RAD) amounts can be negotiable too. The same goes for the rate of advertised extra services fees or additional services fees.
Tip 5 - Understand the impact
It’s equally important to consider the impact that entering an aged care facility may have on your or your loved one’s financial situation and age pension entitlements.
A First Financial aged care specialist adviser will take you through these considerations.
We will look at your current and future income requirements.
We will work with you to create a financial plan that ensures you have sufficient cash-flow to fund both aged care fees and other related costs (such as the ongoing maintenance of the former family home).
We can help with reviewing your estate plans and important legal documents (such as enduring power of attorney) which may need to be updated due to your move into the facility.
Tip 6 - Don’t sell too soon
Avoid selling the family home before seeking advice.
Paying certain aged care fees and renting out the former home could deliver a better outcome.
The overall benefits of not selling may include reduced aged care fees and increased age pension entitlements.
Tip 7 - Rent is not tax-free
Remember that any rental income from your former family home is assessable for tax purposes.
So if you keep your family home and rent it out, it’s important to consider the income tax impact as well as the capital gains implications and whether renovations are required.
Tip 8 - Don’t rely on calculators
There are various online estimators and calculators for aged care.
But these don’t accurately reflect the full spectrum of costs and fees associated with aged care living. And most people use these calculators incorrectly.
Use online calculators for guidance, but speak to an expert in aged care who will have all the pieces of the puzzle to hand.
Tip 9 - Don’t leave it too late
Start planning for your aged care needs early as part of your overall retirement strategy.
It will mean you have enough time to effectively plan for this next phase of life.
Early planning will make a significant difference to your financial outcome.
This advice is equally relevant to those who are looking into aged care on behalf of parents or a loved one. The earlier you have all the information and can form a plan, the easier the transition to aged care will be for your loved one.
Tip 10 - Use a specialist financial planner
Seek advice from a specialist aged care financial adviser prior to making decisions around aged care and your future.
The rules are complex and getting specialist and timely advice and guidance is critical.
Get started on finding the aged care solution that’s right for you by arranging an initial conversation with a First Financial specialist.