Do I need to sell my home to pay for aged care?
Do you have finances set aside should you need to suddenly engage a carer? How about if you need to pack up and move to an aged care facility? These are tough questions, but they’re ones you must answer in order to provide you and your family with financial security and peace of mind as you get older.
Shockingly, as Combined Pensioners senior advisor Charmaine Crowe told ABC News, the average aged care bond (i.e. a sort of interest-free loan to an aged care home to cover accommodation) is about $370,000, with some passing the $2 million mark.
Given that these bonds are based on a means test, Crowe explains that “if someone has more than $155,000 in assets, which would be anyone who owns their home, they would be expected to meet the full cost of their accommodation.”
ASIC’s MoneySmart states that, “From 1 January 2016, new entrants to residential aged care will have their net rental income from their former home assessed under the aged care means test. Anyone who has entered an aged care facility before this date will not be affected by the change.”
Those who need care but cannot afford it under any circumstances (i.e. own less than $45,000 worth of assets) will generally have their costs subsidised by the Government, but for the rest of us, while it’s important to shop around, it’s also recommended that you plan early.
While you might be tempted to sell your home in order to meet the costs of aged care, Rachel Lane, author of Aged Care, Who Cares? suggests you think twice. “If you rent out your house – if there is someone in it – it is not included in the means test for your cost-of-care fee,” Lane told The New Daily. “You can use the rent money to pay your accommodation costs and then you still have an asset that is appreciating in value. But if you sell the house and you get quite a high sum for it, it is included in determining how high your cost-of-care fee will be.”
For more information on your aged care options, click here to visit the Government’s My Aged Care website.
Related links:
4 ways to stay independent for longer
Technology is revolutionising aged care
When is the right time to move a loved one into aged care?