When planning for your retirement, it may be a good idea to take into account your possible need for aged care. Although we all hope to be self-sufficient for as long as possible, aged care can often be an inevitable part of your final years. However, it doesn’t need to be all doom and gloom. The aged care system in Australia is considered by many to be one of the best in the world, and there are some great facilities to choose from when the time comes. There are a number of fees involved with aged care, and the application process can be a little difficult to understand. In this list, we detail some important things you should know about aged care.
1. Aged Care Can Be Expensive
Depending on your assets and income, your aged care can become expensive. The system aims to make aged care accessible to people regardless of their wealth and income. For this reason, the amount paid to the facility by each resident can vary depending on wealth. As well as this, the amount you pay will depend on what type of facility you choose. Extra fees can be applicable for things like swimming pools, gym facilities, and hair salons. There are a wide range of facilities to choose from with varying levels of extra services, so if you are on a tight budget, some homes won’t ask for extra service fees at all. Everyone will pay a basic daily fee, but there are also accommodation fees, means-tested fees, and additional fees for extra services.
2. You May Not Have To Pay the RAD In Full
The Refundable Accommodation Deposit, or ‘RAD’ for short, is a deposit that most aged care facilities will ask for. Depending on the facility you choose, the RAD can be quite high. However, the RAD is up for negotiation, and there are also some alternatives to paying an upfront lump sum. At some facilities, you can choose to pay a daily accommodation fee if you can’t afford to pay the lump sum. You can also try to get the price lowered by negotiating. In some cases, the deposit amount can be as much as halved, and this will be based on the popularity of the facility and the demand for beds. The RAD amount varies for different facilities and can become a crucial factor in choosing your home.
3. You May Have to Pay More Depending On Your Assets.
Certain aged care fees are worked out on a means-tested basis. Residents with the lowest amount of pension savings and assets will pay less, and those with a higher amount of savings and assets will pay more. The means test is optional, and therefore some wealthier people decide to foot the bill of their aged care themselves as opposed to paying the means-tested fee. However, this may mean you lose access to potential government subsidies, and your choice of care facilities may be limited. It’s also important to note that if you are married your means-tested fee will be calculated based on half of the couple’s income and assets as a whole. This can either work in your favour if you have the largest amount of pensions and assets or against you if your partner is wealthier.
4. Extra Services Are An Added Cost.
Depending on how much you pay, your aged care experience can be very different. The basic fees cover the cost of living you will incur such as your bed, your food, and your general living expenses like electricity and basic telecommunications. This basic cost is the same in every facility, but the extra services can really set a home apart from the others. Extra services can include a number of things, such as recreational activities and facilities. Extra services can also refer to things like hair and nail services, cafes, and dining rooms available at the facility.
5. You May Be Entitled To Subsidies From The Government.
When you first begin researching aged care, it may seem like there are a lot of fees and the total cost of aged care is very high. However, taking the means test ensures that you can receive a good amount of subsidies for your accommodation and care fees if you require them. This doesn’t mean the government will foot all of the costs, but taking the means test can significantly reduce the amount you need to pay.
6. You Might Not Need To Sell Your Home When You Move Into Aged Care
Many people fear that when the time comes for them to move into aged care that they will lose their most valuable asset – their family home. However, this doesn’t have to be the case. It is not uncommon for people in aged care to keep their house once they move and use it as a rental property. It can be a good way of increasing your cash flow and helping to pay for the cost of aged care. There is not necessarily any problem with retaining ownership of your family home once you move, as long as you feel you or a family member can manage the responsibility, and your home is still providing a financial return. When making the decision to enter into aged care, you should consult market specialists and advisors to assess the best course of action for your homeownership.
How To Find Out More Information About Aged Care
When you begin searching for aged care options, it can seem daunting as there are a lot of information and fees to understand. Aside from the things already detailed in this article, there is a wealth of information available online about aged care. You can find out more information from the government website and other similar aged-care-related sites.
If you are struggling with knowing how to factor aged care into your retirement planning, you can always try to consult a financial planner to help you to better understand the cost involved with aged care. You can contact the team at Ethica Private Wealth Specialists for a 2 Hour Free Consultation to help you gain more insight into aged care or find the answer to your retirement planning questions.