What 10 Things Everybody Ought to Know About Retirement Living
When's a good time to start looking into retirement homes?
In the budget last year the government announced an incentive for people over 65 to downsize their home. The “downsize incentive” is due to start on 1 July this year (2018) and will allow people over the age of 65 to contribute up to $300,000 from the proceeds of the sale of their home into their superannuation. In the case of a couple this means up to $600,000 could be contributed.
“Baby boomers” are now “Retiring boomers. I encourage people to start now by getting out there and finding out what choices are available to them. Most people skip the important step of research and preparation — starting a search from the Hospital Car park or about 10 minutes before they need a retirement home. There is a better way.
Knowing in advance where to move and what retirement homes you like most will avoid the need to make a hasty decision while under duress. Thinking ahead allows you to make the choice based on your own preferences, rather than leaving the decision to others, who have had this responsibility thrust upon them.
How should you start the search?
As a beginning point on your aged care journey, you should have a client record with My Aged Care (myagedcare.gov.au), know your client number, have chosen the person (or people) you want to make various kinds of decisions on your behalf, should you no longer be able to make them yourself, have a plan to ‘put your affairs in order’, and if you haven’t already, and have had your ACAT assessment.
Don't be afraid to thoroughly research retirement homes; think of it as gathering information you may never need to use. However, the odds are that you or someone you know will benefit from this information. It's not rocket science and an advanced degree is not required. A little legwork will go a long way toward fully understanding your retirement home options.
What should people look for in a retirement home?
Make a list of what you absolutely must have and another of features you want but do not need. When you meet with administrators from the facilities you will be evaluating, it helps to have a clear list of what you want. Know the difference between the residences available to you.
Once you have a home that you are considering, schedule a visit. Look for cleanliness and how staff members speak to one another. If there is respectful communication among the staff members, there is a good chance that they will respect their residents. After your initial visit, pop in again when no one is expecting you. Never be afraid to ask questions or voice concerns. Seek expert advice; take the retirement village contract to a lawyer and/or a financial advisor before you sign.
Are there any hidden fees/costs people should think about?
Homes not designated for Extra Services may offer Additional Services with associated fees. These additional services often include things like daily newspapers, wine with meals, a choice of meals or podiatry or hairdressing services. These are not regulated, and prices can vary greatly from home to home and are agreed upon by you and your aged care provider. Shop around to make sure you are comparing 'Apples with Apples' and are informed about your options. Refuse to be hassled or hurried into a decision.
Can fees be negotiated?
Yes. A facility’s willingness to negotiate is often a function of supply and demand. If the facility has a long waiting list of people who are willing to pay the asking price, they may not negotiate on the price. But if the facility has a number of beds available, they are usually more willing to accept a lower price. Negotiating is just a matter of asking the simple question ‘Are you willing to negotiate the Accommodation Payment?’ (or RAD as it is often called). Facilities may also be willing to negotiate additional services. Again, it is just a question of asking.
What government support is available?
Lots. In addition to My Aged Care there’s the Department of Human Services who provide information about payments, concession cards and the Financial Information Service (FIS). The Department of Social Services (DSS) is responsible for Age Pension policy. The Department of Veterans Affairs provide information for those who have served in Australia’s armed forces. The Department of Health's Aged Care. Queensland Government Seniors. Consumer Affairs and ASIC's MoneySmart.
Are seniors vulnerable when looking at their retirement options?
Yes. A big problem is that accessing the Age Pension, Retirement Living and Residential Aged Care aren’t simple and straightforward topics. There is so much information to be sought and digested and lots of it is very technical and complex. Nobody can deny that Aged care is an extremely complicated area and it really requires a specialised knowledge. Much more than can be obtained by a casual observer reviewing some web sites and attending a few information sessions. Much of the information needs to be sourced; often only on the internet and not all our seniors are tech savvy. Then; the information gathered must be interpreted correctly. It’s a big job and many senior Australians simply get it wrong.
Why is it important to find the right retirement home?
When considering a Retirement Village, a most important consideration is ‘The Vibe’. It’s about finding a community that you want to be a part of – Don’t make assumptions. Go to the Open days. Go to the events that they have that you can participate in things with existing residents.
I have a friend who recently moved into a very nice retirement village on the Queensland South coast but isn’t happy with it because what he didn’t realise when he bought his unit is that most of the people who live there are Doctors or used to be Doctors and he feels left out because he - wasn’t a Doctor. So, he doesn’t have the same relationship with the other residents that they have with each other. Be aware of things like that. It’s not about how much you’re paying it’s about whether you like the other residents and it only takes one ‘Village Idiot’ to ruin it for everybody. So, try and work out it the Village you want to move to has got one of those.
Can you describe examples where you seen seniors ripped off or who regretted choosing a particular home?
Sadly, most abusers are family members. I have heard numerous people tell me that their aging loved one was being taken advantage of by a relative, but that they "didn't want to make trouble" for the relative, so they weren't going to get the Police or the Queensland Civil and Administrative Tribunal (QCAT) involved. This is frustrating to hear. In their minds, ongoing Elder abuse is better than "making trouble".
Granny Flats - Sometimes children move in with Parents or parents move in with Grandchildren. In doing that they establish what is known under Social Security as a Granny Flat right. Granny Flat Rights can have some very interesting implications and I strongly urge Seniors to seek professional advice from your financial planner and lawyer if you are considering establishing a granny flat right with your children or grandchildren.
With Retirement Villages it's failing to identify the ‘Outgoing’ costs. In most situations that can be a very difficult thing to do. Because you’re going to need to forecast what the value of that unit will be when you’re going to leave. So, my advice there is try and use a conservative forecast growth rate and do your sums progressively so that you can see if you live there for two years this is the cost, if I live here for five years this is the cost, ten years etc.
Another important obligation is if you have to bring that unit up to a market standard. Now bringing it up to a standard might just mean a coat of paint and new carpet. Or it could mean a new Kitchen, new Air conditioning, Painting, new Carpet, new Curtains – the whole shooting match. And a one-bedroom apartment can cost you $60,000 to reinstate and that’s as well as the exit fees and the fees you’ve paid along the way. Something you should get an estimate for BEFORE you move into the retirement village. You hear all these stories in the media about the costs. The costs are transparent but aren’t always forthcoming - you just need to ask the right questions. When considering Residential Aged Care look out for Dodgy operators. It's no secret that nursing home operators can be part of the problem as well. Fostering a profit-driven environment that leads to substandard care, while at the same time overworking and resisting wage increases for staff.
What services does Golden Age Advisory offer in terms of retirement ages?
Call me early. Hopefully I can help prevent some of the more common mistakes.
You can’t unsell a house. Like lawyers Financial Planners can be magicians – I can be very, very good at what I do but I can’t unsell the house and unfortunately people come and see me to seek advice when they’ve already made some enormous decisions. And they very politely say – look now that we’ve realised the mess we’ve created can you unstuff it up for us? Well I can – to an extent but I can’t put you in the same financial position that I could have if you had sought advice before you made those decisions.
Golden Age Advisory provides advice on the costs of aged care and help negotiating costs of aged care with providers. I'll help clients identify the best way to manage their income and spending to improve Cash Flow by increasing their pension, reducing the cost of care, identifying and managing any Tax consequence, and recommendations for your Estate Planning.
Certain strategies and financial products can qualify pensioners to access more pension entitlement or lower home care or retirement accommodation costs. This combination of strategy and product can deliver significant improvements in a client’s cashflow. Strategies such as; Gifting, Prepaying Funeral Expenses, Purchasing an Annuity, paying a bigger accommodation payment, staggering a couple’s entry to aged care, Keeping the former home, and Borrowing to fund care can all be appropriate.
There is no silver bullet – no magic one strategy that you can employ that will get you more pension/lesser fees. However; strategies in combination work brilliantly. Doing a number of things and the right amount of those things is going to give you the best result but for that you’re going to need specialist advice. Don’t go to somebody to seek advice on aged care if they don’t specialize in aged care. It is an extremely complicated area and it really is a specialized niche field that advisers seek out and get education in, so you should find those ‘Specialist’ advisers and seek advice from them.
Steve Jenkosky trading as Golden Age Advisory is an Authorised Representative of Synchron AFS License No. 243313.
Unless specifically indicated, the information contained in this BLOG post is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek personal advice from a financial adviser.