Wealth Connexions speaks on everything you need to know before moving into aged care.
When you think of retirement, what do you imagine? Do you think of easy mornings without traffic? Maybe cocktails by the beach as you tan your skin? Or do you think of stressful days surrounded by limited income and the lack of financial freedom? For some, the latter is a nightmare that some retirees live in day-to-day. It’s caused by poor financial choices, which in turn, can affect them for the rest of their life. At Wealth Connexions, we want to ensure you can live out the retired life that you want, with professional aged care financial advice in Brisbane.
How can I protect myself?
Well, firstly, what do you think of when you imagine yourself moving into an aged care facility? You’re most likely thinking about what you’ll do with your home. Most retirees make the mistake of selling their home to pay off the aged care fees, which may make logical sense at the time, but in the future, it can be a huge mistake. Your estate is an important asset that must be carefully managed and looked after, especially if you may need the extra cash to start a new arrangement in aged care. In some instances, selling your home may be the only option for you, but in most cases, the estate can be maintained. This can include looking at different ways to pay for your aged care fees. You may be able to pay these fees daily, upfront or a combination of both. Most aged care facilities are understanding of retiree’s financial situations, but some might be less understanding. It’s so important that you’re managing your finances in the best possible way so that you can actually enjoy your retirement.
We understand that managing money can be stressful, so it’s a good idea for you, or your financial planner to take a means and pension test. These tests will give you a better understanding of how much governmental support you’ll receive and what your regular pension income will be. It’s also incredibly important to consider, which is why we recommend that you don’t sell your home, is that your estate isn’t included in either of these tests when regarding assets. If you fall into the “full support” category, the Australian Federal Government will cover your entry deposit when you move into an aged care home, however, you will still need to pay a daily admission fee. To put your income into perspective, the average daily admission fee is sitting around $52 AUD.
So, what should I do?
That decision is completely up to you. We want to give you the best financial care advice in Brisbane possible, but it’s ultimately your decision on what you want to do with your home. There are many pros and cons for both situations, but we feel that there are fewer positives when selling your home. If you sell your home, you’ll be able to pay a lump sum for your aged care fees, though you’ll also receive less pension income due to the amount of money you’ll have from selling the home.
The best option that we’ve found, is that you rent your home and treat it solely as an asset. You’ll receive more income from the rent you’ve set, you’ll still be connected to your home and its memories without being forced to say goodbye, and you can still access capital gains as the house market increases in price. There are a few negatives in renting, which are, your rental price will be included in the pension test, you may need to pay tax on the rental income, and you’re taking a risk with the possible market changes.