Navigating Aged Care: A Guide to Planning and Financial Considerations
As we get older, thinking about aged care can feel overwhelming, whether for ourselves or a loved one. It’s a topic many of us avoid until a sudden health issue forces a decision. But the reality is, planning ahead can make the transition far smoother and help avoid financial and emotional stress down the line.
Aged care isn’t just about moving into a nursing home—it’s a broad landscape with various options designed to help seniors maintain their quality of life. Some prefer to stay in their own homes with a little extra help, while others find comfort and security in a residential aged care facility. Understanding these options can give you the confidence to make informed choices when the time comes.
Finding the Right Aged Care Option
Not all aged care looks the same, and it’s certainly not a one-size-fits-all situation. Generally, aged care falls into three categories. Some people choose retirement villages, which allow for independent living while providing access to support services if needed. Others opt for in-home care, where help with daily tasks like cleaning or meal preparation is provided by professionals, family, or friends. For those who require more hands-on care, residential aged care offers 24/7 support with accommodation, meals, and medical assistance all included.
Many seniors want to remain in their own homes for as long as possible, which makes in-home care a popular choice. However, it’s essential to be realistic about changing needs over time and plan for potential transitions when the need arises.
Getting the Legal and Financial Side in Order
Making sure the right legal documents are in place early on can prevent unnecessary complications later. A key document is the Enduring Power of Attorney (EPOA), which allows a trusted person to manage financial affairs if the individual is unable to do so. Similarly, an Enduring Power of Guardianship ensures someone is authorised to make health and lifestyle decisions when necessary.
An Advance Care Directive is also worth considering—it outlines personal preferences for medical treatment, ensuring that important decisions align with the individual's wishes. Having these legalities sorted in advance can ease stress for both the individual and their family when difficult decisions arise.
Accessing Government Assistance
Thankfully, government support is available to help cover some of the costs of aged care. My Aged Care is the gateway to accessing these services, starting with an assessment to determine eligibility and level of need. There are different programs available, including the Commonwealth Home Support Program (CHSP), which provides basic assistance like cleaning and transport, and Home Care Packages (HCP), which offer more comprehensive support at different funding levels. For those moving into residential care, government subsidies can also significantly reduce costs.
Even if assistance isn’t needed right away, getting an assessment early ensures that support will be available when the time comes, acting like an insurance policy for future needs.
What Does Aged Care Cost?
Aged care fees can be confusing, but understanding the basics can help families plan accordingly. For residential care, the main costs include:
Accommodation Costs: This is the price of the room in a care facility. It can be paid as a Refundable Accommodation Deposit (RAD) (a lump sum that is returned upon departure) or as Daily Accommodation Payments (DAP) (ongoing rental-style payments). Some people choose a mix of both.
Basic Daily Fee: Set by the government, this covers food, utilities, and daily living expenses. Currently, it’s around $61 per day.
Means-Tested Care Fee: Based on financial circumstances, this contribution varies and is subject to annual and lifetime caps to ensure affordability.
Additional Services Fee: Some facilities offer premium services like upgraded meals or recreational activities for an extra charge.
What Happens to the Family Home?
One of the biggest concerns families have is whether the family home will need to be sold to cover aged care costs. The answer depends on individual circumstances. If a spouse or dependent remains in the home, it is usually exempt from means testing. If both partners move into care, selling the home may be necessary, but renting it out could also provide an income stream to cover fees.
Because these decisions can impact pension eligibility and long-term finances, consulting a financial adviser is highly recommended before making a move.
Why Professional Advice is Essential
Aged care is a complex area, with ever-changing rules and financial implications. Seeking professional advice ensures that the best decisions are made, not just for immediate care needs, but for long-term financial security. Specialist aged care financial advisers can help families navigate government subsidies, optimise financial strategies, and plan for estate considerations.
Not all financial advisers are experienced in aged care planning, so it’s important to choose one who is ASIC-registered and has expertise in this field. The right advice can make all the difference in ensuring aged care remains affordable and sustainable.
Final Thoughts
Aged care planning is about much more than just finances—it’s about ensuring a comfortable and dignified future. While the process can feel daunting, taking a proactive approach allows families to make informed, confident decisions before a crisis occurs.
By exploring options, organising legal and financial documents, and seeking professional advice, families can navigate aged care with far less stress and uncertainty. Whether staying at home with a bit of help or transitioning to residential care, knowing the choices ahead can provide much-needed peace of mind.
The information provided in this article is general in nature and has been prepared without considering your personal objectives, financial situation, or needs. It does not constitute financial advice. Before making any decisions, you should assess its appropriateness and seek professional financial advice tailored to your circumstances. Additionally, ensure you review the relevant Product Disclosure Statement (PDS) before deciding on any financial product.