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We’ll all need care at some point. So plan for it.

June 2019

Gayle Bryant outlines mistakes Australians make when it comes to aged care, and how to fix them.

You can avoid it all you like but there will come a time when you’ll need to consider your aged care needs – or those of family members.

Too often, we’re forced to think about aged care because of a crisis, such as a fall, and you find you can no longer live independently in your home. Seeking advice before such an event helps you plan for such a massive life change.

Aged Care Steps director Louise Biti says the average age of someone moving into aged care is around 80 to 84 years old, but adds that even at that age they’re generally not emotionally or financially ready.

“Most people aren’t mentally ready because we all hope aged care won’t happen – but it does,” she says. “And when the time comes they generally don’t have the documentation in place for others to start helping them make decisions around the move.”

Planning care before you need it

Biti says we need to think ahead to what we want, such as whether we need in-home care or to move into an aged care facility.

“This includes decisions around what type of home we buy and where to live,” she says. “For example, can you get a walker through the doors if you need one and are there too many stairs? Sometimes it’s the unsuitability of your home that will cause you to move.”

Biti adds we also need to start having conversations with family.

“Family conversations can help members deal with their grief or better know their responsibilities at the appropriate time. We should also make sure powers of attorney, guardianship and medical directives are put in place.”
There are several aged care options in Australia depending on your needs.

  • Residential care provides a range of care options and accommodation for older people who are unable to continue living independently in their own homes.
  • Home care (Home Care Packages Program) provides different levels of aged care services – including ongoing personal and support services and clinical care – for people who want to stay in their own homes to help them with their day-to-day activities.
  • Home support (Commonwealth Home Support Programme) provides entry-level support for those who want to continue to live at home but need help with everyday activities.

How much does aged care cost?

Aged Care Gurus principal Rachel Lane says there are misconceptions around how much you need to be comfortable in an aged care facility: a key one being if someone doesn’t have any money they won’t get in.

“The fact is, aged care facilities have to maintain a ratio of those people who are supported by the government and those who pay their own way,” she says. “It is misleading to say the most common refundable aged care deposit is say, $500,000 for example, because while that facility may be charging that on average, there could be 30 per cent to 40 per cent of residents living there who are paying much less or nothing at all.”

However, planning for the cost of aged care should not be ignored and Lane says while much of the conversation is around selling the family home to pay for it, superannuation plays an essential role.

“While many people view superannuation as an investment to provide them with an income in retirement, it can also be used to fund a lump-sum accommodation payment in aged care,” she says. “This potentially preserves other assets, such as the family home.”

Financial planners need to start raising these conversations about use of super and other matters with clients, Biti says: “Planners like having conversations around the holidays their clients are going to have at retirement and the fun things they’ll do but they need to discuss how to prepare for the latter part of their lives as well.”

If you want care in your own home you need to be proactive about it, Lane says.

“The system is not instantaneous. There is a process to get assessed and then there is a prioritisation queue because not everyone is going to get a home-care package. You need to be talking about this with your financial planner and planning for the fact that the package won’t start on day one. So how will you get the care and services that you want and need until the package starts?”

RetireInvest Circular Quay financial adviser John Walker says if the average Australian has a house then they are well on the way to being financially prepared for aged care costs. “However, to avoid being forced to sell the family home too soon, surplus funds need to be built up.”

The next step is to start looking at how people will pay for their aged care.

“This is the hardest question,” Biti says. “How much you need depends on what happens to you and what the rules are like at that point. It also depends on how much the government will subsidise and how much your contribution will be. What you pay will also depend on what you own because of means testing.”

A checklist for planning aged care

Family members should also be involved. “One can take on the role of project manager and coordinator,” Walker says. “It is common for one family member to step up while others show disinterest – until they disagree about the decisions being made. There should also be an individual that reassures the aged care resident that they are being well looked after. It is a challenge for all knowing that a loved one is in the final stage of their life.”

Walker says while hospitals guide the medically challenged and their families towards a range of facilities, too few are directed to competent financial planners that specialise in aged care funding.

“Advisers should specialise or refer to a specialist,” he says. “There is nothing more complicated in planning than aged care planning.”

The following are questions Walker says those considering aged care for themselves or family members should be asking:

  • Do you know anyone in care? How are they coping – emotionally and financially?
  • What will be the likely trigger to enter care?
  • How do you think you or your family members will cope when this happens?
  • What is being done now to prepare for aged care costs?
  • What decisions are being made around the family home? Have other family members been consulted about this?
  • How will the accommodation and the ongoing costs be paid?
  • Has a will, power of attorney and enduring guardianship been drawn up?

 

To create an aged care plan that’s right for you, contact your financial adviser.

Gayle Bryant is a freelance financial and business journalist and sub-editor based in Sydney.

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