The problem of finding and funding adequate aged care

The problem of finding and funding adequate aged care
Photo: Nyul, Bigstock

Aged care, particularly the level of care required once people can no longer take care of themselves, is expensive and can be hard to find. The issue of funding can be resolved in a meeting with a specialist adviser like Sydney Aged Care Financial Advisers, and they will also be able to help to find a facility that offers the care that you or your loved ones need.

As people age and their bodies and/or minds deteriorate they can often require a higher level of care than can be provided within their own home. Full term accommodation and round-the-clock care is very expensive, and the government subsidies available are not usually able to cover the full amount – especially when these are means tested.

People in retirement are generally asset rich and cash poor, in the sense that they have built up a sizeable superannuation account and own their own home but do not have much of a liquid income. As they move into old age they are also unlikely to want to move out of their own home, particularly if they have dementia or another cognitive deteriorative condition. This means that their children have the burden of figuring out how comfortable care will be paid for, and need to convince the parent/s to agree.

If there is a substantial amount of superannuation left then this can be cashed out to cover a lot of the care costs, and this is an easy solution. However, commonly the property owned by the people going into care is used to fund it, either through a reverse mortgage or by being sold and either investing the money or putting it in a bank and gradually drawing it down.

Rental income is counted as a part of the means testing for government subsidies for aged care, meaning that there isn’t a lot of point to keeping the family home and renting it out. Selling is often the only practical solution – but then what do you do with the money to make it last and continue funding a comfortable retirement?

An accommodation bond is how you pay for the care home. This can either be paid as one lump sum, periodic payments or a combination of the two. The bond is kept by the home operators and any interest or earnings they make from it is used to pay for your care. When you leave the accommodation or die the bond is returned to you or your estate.

An aged care financial adviser will help to work out what your best option is in this regard. If you can continue to make the payments by investing your money elsewhere then paying in instalments will help you to preserve your wealth for yourself, if you are able to leave the retirement home in the future, or for your heirs.

Finding an appropriate retirement facility is only the start of the aged care puzzle. Once you have settled on one, it is a good idea to speak to an aged care financial adviser to find the best way to pay for it and preserve your built up wealth as much as possible.