Moving a parent or loved one into aged care is often one of the most stressful periods a family will face. Decisions need to be made quickly, emotions are running high and the financial choices involved can be significant. In many cases, families are dealing with hundreds of thousands… sometimes millions of dollars, often accumulated over a lifetime. One of the most common mistakes I see families make is assuming the financial side of aged care is simple.
The “Simple” Plan Many Families Choose
A common approach families take is something like this:
- Sell the family home
- Pay the Refundable Accommodation Deposit (RAD) in full
- Put the remaining money into a term deposit
On the surface, this plan seems logical and straightforward. But aged care financial decisions are rarely that simple.
Making this decision without understanding the full financial implications can sometimes mean families are missing opportunities to reduce costs or improve outcomes. Yes ‘winging’ it may sometimes work out, but in many cases I have seen, it does not.
Why Aged Care Financial Decisions Are Complex
Aged care financial planning sits at the intersection of several different areas, including:
- Centrelink rules and entitlements
- Aged care fee structures
- Investment decisions
- Superannuation
- Tax considerations
- Family and estate planning
Each of these factors can influence the overall cost of aged care and the financial position of the family.
For example, the way assets are structured can affect:
- Age Pension eligibility
- Means-tested care fees
- Ongoing cash flow
A small change in strategy can sometimes make a significant difference to the long-term financial outcome.
The Importance of Specialist Advice
Aged care financial advice is a specialist area within financial planning. Since 2014, I have specialised in advising families navigating the aged care system and have completed additional specialist studies in this area.
This type of advice requires a detailed understanding of:
- Centrelink regulations
- aged care fee calculations
- investment structures
- taxation implications
Because these areas interact with each other, the right strategy needs to consider the full picture, not just one piece of the puzzle.
It’s Not Just About Money
While financial decisions are important, aged care planning is also about people. Often, when families come to see me, they are powers of attorney trying to make the best possible decision for their parent.
It can be an emotional time. Families may feel pressure to make major decisions within a short timeframe, and they want reassurance that they are doing the right thing. Part of my role is helping families slow the process down where possible and ask important questions such as:
- What would Mum or Dad want?
- What financial outcome are we trying to achieve?
- What will provide the most security and peace of mind?
Making Decisions Based on Facts
When families receive specialist advice, they can review their options with clear information in front of them.
This includes understanding:
- the aged care fees involved
- the potential Centrelink outcomes
- the expected cash flow
- the impact of different strategies
Having this information allows families to make decisions calmly and confidently, rather than feeling like they are guessing.
Seeking Guidance Before Making a Decision
Entering aged care often involves some of the largest financial decisions a family will ever make. Taking the time to seek advice before making those decisions can help ensure all factors are considered and that the strategy chosen is the right one for the individual and their family.
If you or a family member are considering aged care and would like guidance on the financial implications, feel free to get in touch to discuss your situation.
