The biggest Aged Care mistakes to avoid


The biggest Aged Care mistakes to avoid

After providing financial advice for 24 years, it is only natural and expected to see some of my clients getting to the stage in life when Aged Care is becoming of importance. So as a natural progression Aged Care has to be included as part of my advice and service.

If you think that rules around Age Pension are complex, you haven’t seen anything yet. Wait till you get to this point in your life when you or your family members have to battle the complexity of this system.

I find it so very ironic, that the older we get, the more complicated things become.

But I suppose it is due to ongoing changes, updates and supposed improvements that each government is trying to implement, looking only from the policymaker perspective and not thinking at all about the final user or provider.

One is almost expected to have a law degree to understand those legal documents, fees structure and what can or cannot be negotiated.

So today I would like to make you aware about the most common and very costly mistakes that lots of families make and how to avoid them.

I found this incredible quote that really makes me smile:
“Age is simply the number of years the world has been enjoying you” 

So let’s allow the world to enjoy your love one a little longer, whether that is your partner, your mum or your dad, who you are trying to assist in Aged Care preparation. By avoiding mistakes that can create real nightmare for your them or for you, let’s create a peaceful and enjoyable environment for the remaining years of his or her life.

Mistake 1: Making Aged Care decisions in a crisis with no planning but in a panic. 

Sadly, the vast majority of older people go into Aged Care with no plan and usually completely unprepared.

They might have a fall or other medical trauma, have undergone an Aged Care Assessment, often in a hospital after which they are not allowed to return home due to health issues and inability to continue living independently.

As a result the family is forced to make rushed decisions that can end up seeing your loved one ripped off and short-changed by this overcomplicated system.

But it can be so very easily fixed. All members of the family should be involved in this discussion. This way each person will know their responsibility and the best outcome that can be achieved by reaching understanding and clarity.

It could be included as you start setting up your assets for your retirement, but in most cases I do this with my clients at one of our reviews, especially when I hear about medical problems re-occurring or consistent falls or just simply progressing with age.

If you read: 31 ways to improve Retirement Planning Part 1 and Part 2, you will see that it is one of the recommended steps of setting up your plan. You can also read Aged Care Planning with Ease.

This is the time to re-structure assets correctly to reach the best financial outcome for the person entering Aged Care, but also a partner that might remain at home. It is also an appropriate time to get an Advanced Care Directive completed.

Mistake 2: Missing out on in-home Aged Care services

To qualify for a Home Care Package, you will need to have an assessment of your care needs, that is done by an ACAT (Aged Care Assessment Team). The assessment is free and will normally be conducted in your own home to work out what things you are happy and capable doing for yourself, and in what areas some assistance is needed and then to identify the services that could be available to you.

Since 2017 Home Care Package funding has been allocated to the care recipient – you, and not a care provider. This way you have all control, you can pick your preferred provider and type of services that you want.

Mistake 3: Selling the family home without receiving advice

I spoke many times in my videos about Income and Assets Test that Centrelink applies to work out your Age Pension eligibility.

A very similar situation is when moving into a residential Aged Care facility. Yet again assets and income will be assessed to calculate fees. Therefore, the outcome of such assessment will determine if the person entering the Aged Care facility is:

– a fully-supported resident,

– a partially-supported resident or

– a resident that pays a full market price.

The person entering the Age Care is not required to sell the family home to enter Aged Care facility.  Sometimes, the decision to sell or not to sell is purely financial.

Other times it can be very emotional, as leaving home of many years of family happiness and memories, might be very difficult.

But the truth is that the choice about the family home may impact dramatically on the cost of care, and eligibility for Age Pension.

Whatever the decision about family home is, it is essential to make sure, that there is enough cash flow to pay Aged Care fees and meet any other living expenses.

And this is where the assistance of the experienced Financial Planner is invaluable. It can be a difference of having access to Age Pension or losing it.

Good planning can also achieve a great deal of saving in the ongoing fees payable for care. But please remember that not every financial planner operates in Aged Care environment, so choose the one with experience and required knowledge in this area.

Mistake 4: Entering a granny flat arrangement without advice and a formal agreement

Granny flat these days is no longer a typical separate building in kids backyard situation.

It is a type of a financial and living arrangement with their family, with the purpose to defer entry to residential Aged Care for as long as possible.

And again, we enter the area of very special set of rules that apply to granny flat arrangements. If done incorrectly, it can affect your eligibility or rate of payment for Age Pension.

So, my recommendation is:

– get a good advice from a financial planner to understand your choices and impact each will have on your assets, your cashflow, your Age Pension and what impact will such arrangement have should you require to enter Aged Care in the future.

– if a granny flat agreement is beneficial for you, then a legal advice is paramount.  Such agreement is a formal written document that clearly sets out the terms of the granny flat interest. Not only agreement is black and white and everyone understands all implications, it will provide security for parents for the future, but also Centrelink will require such agreement to be presented to them on Age Pension assessment.

As a matter of fact, a good, responsible and caring lawyer when asked to prepare such an agreement will ask you to seek financial advice, before entering and signing granny flat agreement.

Mistake 5 – Not seeking financial advice 

I mentioned this already several times, but there are those very important moments in our lives, when advice is just a must. And most certainly preparation for Aged Care in whichever shape of form is one of those crucial moments.

Setting it up correctly can provide peace of mind with financial security and personal enjoyment and satisfaction, where we can just concentrate on our loved once, rather than worrying about the money and ongoingly fighting the Aged Care or Age Pension systems.

If you think this is a valuable information, please share it with your family, your friends, and If you are in the situation of needing such an advice, feel free to reach out. 

Remember that Retirement is a Journey not a Destination, so be well prepared for this Ride.  


By: Katherine Isbrandt CFP®
Money Strategist & Retirement Planner
Principal of About Retirement

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