FAQs

You may have options when you change jobs which could include:

• You can keep your existing fund and instruct your employer to make super contributions to this fund (there may be instances where this is not possible for certain employment sectors such as healthcare)
• You can keep your existing fund and instruct your employer to set up a new super scheme for you (this may be appropriate if you have insurance in your existing scheme that you want to maintain)
• You can instruct your employer to set up a new super scheme for you and transfer (rollover) your existing super balance to the new scheme(be very careful if you have insurance cover in your existing scheme)

The purpose of superannuation is to provide benefits for retirement. To ensure this occurs in most cases the Government has legislated that superannuation is ‘preserved’, that is members can’t access their benefits until they meet a ‘condition of release’.

The most common conditions of release are:

• Attaining preservation age: Members who are under 65 and have reached preservation age, but remain gainfully employed on a full-time or part-time basis, may access their benefits as a non-commutable income stream.
• Attaining age 65: A member who reaches age 65 may cash their benefits at any time.
• Retirement: Actual retirement depends on a person’s age and, for those between preservation age and 60 years old, their future employment intentions. A retired member can’t access their preserved benefits before they reach their preservation age which is based on when they were born as listed in the table below.

There are a number of other circumstances in which benefits can be released before reaching preservation age, such as incapacity, severe financial hardship, temporary residents leaving Australia, terminal medical condition. There are specific rules for each of these and some have restrictions on the way the benefits can be received.

Spouse contributions are non-concessional contributions made by a person on behalf of their spouse. The contributor can claim a tax rebate of 18% (up to $540) for the first $3,000 of spouse contributions made, provided the spouse has assessable income of $37,000 or less.

Over this threshold, the rebate reduces by 18 cents for every $1 of income and reduces to $0 where the spouse’s income is greater than $40,000.

The amount you contribute will count towards the receiving spouse’s non-concessional contributions cap and the receiving spouse will need to have a super balance below the total super balance cap to receive the contribution.

Spouse contributions are non-concessional contributions made by a person on behalf of their spouse. The contributor can claim a tax rebate of 18% (up to $540) for the first $3,000 of spouse contributions made, provided the spouse has an assessable income of $37,000 or less.

Over this threshold, the rebate reduces by 18 cents for every $1 of income and reduces to $0 where the spouse’s income is greater than $40,000.

The amount you contribute will count towards the receiving spouse’s non-concessional contributions cap and the receiving spouse will need to have a super balance below the total super balance cap to receive the contribution.

If your total super balance as at the 30th June of the previous year is greater than $1.6 million you cannot make non-concessional contributions to super.  You will still be able to make concessional contributions up to the annual cap which is currently $25,000.

Furthermore, you may only use $1.6 million of your superannuation balance to start a tax free pension, known as your transfer balance cap.  Any balance over $1.6 million must been retained in your accumulation superannuation where the earnings are taxed at 15%.

If you are over age 65 and sell your principle residence which you have lived in for 10 years or more, you can make a “downsizer” contribution of up to $300,000 into superannuation (up to $600,000 for a couple).

• Downsizer contributions provide greater flexibility for many older people to top up their superannuation balances because:
• They are not counted against your concessional or non-concessional caps;
• They can be made regardless of the member’s total superannuation balance, and
• They are not subject to the “work test”, which otherwise requires a member over 65 to have worked a minimum of 40 hours in any period of 30 consecutive days before a contribution is made.
• However, it is essential to understand the rules before making any contribution.

Your home must have been owned by you, your spouse, your former spouse, or the trustee of your deceased spouse for the 10 years prior to you selling.

You must be 65 or older, the contribution must be made to a complying superannuation fund and you must not have previously made a downsizer contributions in relation to an earlier disposal of a main residence.

The amount of the contribution must be equal to, or part of, the proceeds from the sale of you home.  The sale of your holiday house, investment property, caravan, houseboat or other mobile home does not qualify.

Despite the name “downsizer”, it isn’t necessary to purchase a replacement main residence in order to qualify.  However, the contribution must be made within 90 days after ownership of the main residence changes (usually 90 days after settlement).  You must complete and submit ATO downsizer contribution form to your super fund that either before or at the time you make the contribution.

The transfer balance cap is a limit on how much superannuation can be transferred from your accumulation superannuation account to a tax-free ‘retirement phase’ account. The general transfer balance cap is currently $1.6 million and all individuals have a personal transfer balance cap of $1.6 million.

There are two types of super contributions:

Concessional contributions:  Also known as ‘before-tax’ contributions and include:

• Employer contributions (compulsory 9.5% superannuation guarantee)
• Salary sacrifice
• Personal contributions which you claim a tax deduction for

These contributions are taxed at 15% as they enter the fund.

Non-concessional contributions:  Also known as ‘after-tax’ contributions and include:

• Personal contributions you make as a super fund member and don’t claim as a tax deduction in your income tax return. These are often called ‘voluntary’ contributions.
• Spouse contributions are made directly into your spouse’s super account. This can be a tax-effective way for a couple to save for retirement if one partner is only working part-time or has a low income.

These contributions do not incur contribution tax.

There are limits on the super contributions you can make to your super fund each year depending on the type of contribution you make.

• Concessional contributions – $25,000 pa
• Non-concessional contributions – $100,000 pa

Can we hyperlink concessional and non-concessional to the previous question??

The concessional contributions cap is currently $25,000 pa, unless you’re eligible to make carry-forward contributions. Carry-forward contributions allow you to carry-forward any unused concessional contributions cap in any financial year for the next five years.

The cap for non-concessional contributions is currently $100,000 pa, unless you are eligible to use the bring-forward rule. The bring-forward rule allows you to bring-forward the next three years of your annual non-concessional contributions cap into the current financial year, meaning you can contribute up to $300,000 without exceeding the cap.

From 1 July 2018 there is a 5-year carry forward of unused concessional contributions under the annual $25,000 cap.  Key features include:

• Unused concessional contributions up to the cap of $25,000 pa can be carried forward for a maximum of 5 years.
• Your total superannuation balance must be less than $500,000 as at 30 June of the previous financial year.
• The new rules apply from 1 July 2018 which means only unused cap amounts from 2018-19 and later financial years can be carried forward (the first financial year in which unused concessional contributions can be used is 2019-20).

The bring-forward rule allows you to bring forward two years of non-concessional cap therefore you can contribute a maximum non-concessional contribution of $300,000 (instead of the $100,000 annual cap).

To be eligible you must meet the following criteria:

• You must be under 65 at some point in the triggering year (there is legislation currently proposed to lift this age to under 67)
• Your total super balance at the beginning of that year must be at no greater than $1.5 million

The available amount and period of bring-forward is also determined by the value of your total superannuation balance:

• Total super balance greater than $1.6 million has no available non-concessional cap
• Total super balance between $1.5 million and $1.6 million has the standard cap of $100,000 and no bring forward period.
• Total super balance between $1.4 million and $1.5 million has a cap of $200,000 with a bring forward period of 2 years.
• Total super balance less than $1.4 million has a cap of $300,000 and a bring forward period of 3 years.
• The applicable total superannuation balance is measured as at 30 June of the previous financial year.

The government places restrictions on when you can access your super so you can only access it if you have satisfied a condition of release such as:

• Retiring permanently from the workforce on, or after, reaching your preservation age
• terminating your employment after you reach 60
• reaching 65
• becoming temporary or permanently incapacitated
• having a terminal medical condition
• death.

Your preservation age depends on your date of birth:

Some conditions of release allow the partial cashing of benefits, including:

• compassionate grounds
• financial hardship.

In some instances, if withdrawals are made under age 60 there could be some tax consequences relating to the taxable component of the super withdrawal.

Account Based Pensions

You can start an account-based pension by transferring your superannuation savings into a pension account and begin drawing regular payments into your bank account, just like a salary.

You can choose how much income you want (above the specified age-based minimum) and continue to receive regular income, until all of your super savings are exhausted, or you pass away.   When you die, the balance of the savings is paid to your nominated beneficiary or to your estate.

The minimum pension factors are based on your age and are as follows:

NOTE – In 2020, due to the Coronavirus, the Government halved the minimum pension factors for the 2019-20 and 2020-21 financial years.

Your income payments are tax-free once you reach age 60. Tax could be payable under age 60, but you may be eligible for a tax offset of up to 15% on any taxable amount.

Account based pensions are very tax effective as there is no tax on investment earnings, no capital gains tax and no tax on any lump sum withdrawals.

Fixed Term Annuity

You can use your superannuation savings or your personal savings (non-superannuation money) to purchase an annuity.  Annuities provide a guaranteed regular income in exchange for an initial lump sum amount, paid to you monthly, quarterly, half-yearly, or yearly, whichever suits your needs best, for the term of the annuity. The return of the Annuity is determined at the commencement of the investment and generally is based on the current available interest rate.

As the name suggests a fixed term annuity will pay you an income for a set period of time, usually between 1 and 30 years. If you live longer than the fixed term, the annuity will stop.  When you purchase the annuity, you can choose to receive all or part of your original investment amount back at the end of the term (this is called the residual capital value), however this will reduce the amount you receive each year as income.

Transition to retirement (TTR) pension

A transition to retirement pension is an income stream you can commence while you are still working, using your superannuation, if you are over your preservation age (starting at age 55 and increasing depending on your date of birth).

If you would like to reduce your working hours without reducing your income, then a transition to retirement pension could be the solution, allowing you to top up your part-time income with a regular ‘income stream’ from your super savings.

You can choose to take up to a maximum of 10% of the account balance as at 1st July each year as a regular payment.  The normal minimum pension factors apply to TTR pensions (see Account Based Pensions).

With this type of pension, you are restricted from taking lump sum withdrawals.  However, when you reach age 65 or stop working, it automatically converts to a normal account-based pension and you are free to take lump sum withdrawals (if you wish).

When you retire and your salary stops, to assist with funding your living costs you can set up regular payments from your savings. This is called a ‘retirement income stream’.  The type of income stream you can start will depend on whether your savings are depends on whether the savings are inside or outside of super.

This is not a straightforward question and it really depends on the type of lifestyle you want after you retire.  Most people’s lifestyles will be less costly in older age, because they usually no longer have to support children and have often paid off their mortgage.

The Australian Prudential Regulation Authority estimates that on average, most people need an income equivalent to about 60% of their annual salary. They also estimate that the average worker needs a total investment of about seven times their annual salary to achieve this. This requires a significant contribution over a period of decades if the contribution is in the range of 10% of salary. It is important to realise that the current rate for the age pension is about 25% of average weekly earnings (and you may have been earning more than the average when you were working).

An exchange traded fund (ETF) is a type of security that involves a collection of securities—such as shares—that often tracks an underlying index, although they can invest in any number of industry sectors or use various strategies.  ETFs are in many ways similar to managed funds, however they are listed on exchanges and ETF’s trade throughout the day just like ordinary shares on the stock exchange.

A managed fund is a pool of money managed by a professional fund manager. Individual investors buy units in the managed fund, which is then managed by a funds management company for a fee.

Managed funds commonly invest in shares, property, bonds, fixed interest, cash or alternative assets and are a convenient and efficient way to achieve diversification and active management of your money.

Asset allocation is the process of balancing risk and return in a portfolio by investing across different asset classes.  The major asset classes include cash, bonds (fixed interest), property and shares.

Maintaining a diversified portfolio can help reduce overall investment risk by combining asset classes which don’t tend to move in the same at the same time and enhance returns over time.

Exposure to a certain amount of risk is a central element of investment decisions.  A risk profile is an evaluation of an individual’s willingness and ability to accept and take on risks. Risk profiling is a process adviser’s use to help determine a client’s tolerance to risk and is important for determining the appropriate asset allocation for that client.

As a general rule, the younger you are the greater amount of risk you can tolerate, and as you get older your risk tolerance reduces, but this is not always the case.  Your risk profile can change over time and should be reviewed periodically.

The main asset classes that people refer to are cash, fixed interest, property and shares.

The reason why it’s so important to understand asset classes is because they each have different levels of risk and return – the main criteria by which investors generally choose what they invest in.

Understanding what to expect from the different asset classes will help you decide which types of investments best suit your needs and investment timeframe.

Cash

Cash generally refers to investments in bank bills and similar securities which have a short investment timeframe.

Cash investments generally provide a stable return, with low potential for capital loss.

Fixed interest

Fixed interest securities, such as bonds, generally operate in the same way as loans.

You pay cash for the bond, and in return you receive a regular interest payment from the bond issuer for an agreed period of time. The value of the bond can fluctuate based on interest rate movements.

When the bond matures, the loan is repaid in cash. Historically, bonds have provided a more consistent but lower return than shares.

Property

Property generally involves buying a property directly or investing in property securities. Property securities do not involve buying a property directly.

Instead they can provide an indirect exposure to property and generally represent a part ownership of a company or an entitlement to the assets of a trust.

The company or trust may hold, manage or develop infrastructure and real property in sectors such as office, industrial and retail.

Property securities are generally listed on a stock exchange and are bought and sold like shares.

Shares

Shares represent a part ownership of a company and are generally bought and sold on a stock exchange.

Shares are generally considered to be more risky than the other asset classes because their value tends to fluctuate more than that of other asset classes.

However, over the longer term they have tended to outperform the other asset classes.

You, your beneficiary, or your legal representative will need to call or write to your insurer. You’ll be sent a claim form to complete and return back to them, along with proof the insured event took place. Your insurer may also ask your doctor (if applicable) to fill out a form. If you want to make a claim on your policy, you should do so as soon as possible, ideally within 120 days of the insured event taking place.

Policies may have certain ‘exclusions’. An exclusion (sometimes called a special provision or special terms) on your policy is a specified event that’s not covered by your policy. For example, depending on your insurance cover provider, you will not be covered for death or a terminal illness resulting from a self-inflicted injury for the first 13 months of your policy. Also, if you’ve disclosed any existing health conditions, or lifestyle activities that are deemed hazardous or risky during your application, then you may find that a death or terminal illness resulting from these may also be excluded from cover.  It’s always a good idea to check your insurance contract (also called a policy schedule) to know everything that’s not covered by your policy.

Insurance cover provides peace of mind your financial security will be protected should unforeseen events arise.  It is reassuring to know that should anything happen to you, your loved ones won’t be left in a financially difficult situation.

When taking out insurance, you generally have a choice between a stepped and level premium.

Stepped premium – your premium increases every year with your age as well as annual inflationary and policy fee increases.  Stepped premiums are more cost effective in the early years of the policy and become more expensive when you get older.

Level premium – your premium generally does not change (with the exception of annual inflationary and policy fee increases) and is based on your age when the policy commences.   Level premiums are more expensive in the early years of the policy, but can provide considerable cost savings if the policy is held for a long time.

While stepped premiums are usually lower in the early years, level premiums can be a more cost-effective option if you retain the insurance over a longer period. If insurance cover is only required for a short timeframe, a stepped premium may be more appropriate and cost-effective

Your insurance premium will depend on a number of factors including how much cover you apply for, your age, state of health, occupation.

For income protection it will also depend on your salary, the waiting period you nominate before receiving a claim benefit and how long you want the benefit to continue (2 years, 5 years, to age 65 or 70).

To assist with cashflow, death, TPD and income protection cover can be funded using your superannuation however it is important to consider what impact this will have on your retirement savings in the future.

Often people wonder how much insurance cover is enough. Well, this is a difficult question and depends on many factors, such as debt and lifestyle preferences.  Affordability of the cover also needs to be taken into account.  We can assist you determine the most appropriate level of cover to meet your needs.

Life Insurance (death cover)

Life insurance can provide a lump sum to your estate or a nominated beneficiary in accordance with your directions if you die within the duration of your policy.  The cash lump sum may also be advanced if you are diagnosed with a terminal illness and have less then twelve months to live.

Total and Permanent Disability Insurance (TPD)

TPD pays a lump sum if you are totally and permanently disabled. This money can help replace your income, cover your medical expenses plus rehabilitation costs, and generally keep you and your family running during a difficult time.

Trauma Insurance (also known as Critical Illness or Recovery Insurance)

Trauma cover provides a lump sum when you are diagnosed with one of several specified conditions, such as heart attack, cancer, stroke and many others.

Income Protection Insurance (also known as Sickness and Accident Cover)

Income Protection will pay you a percentage of your pre-tax income if you can’t work due to illness or injury. This money could go a long way to keeping your household, or your business, running while you concentrate on your recovery.

2020-21 Personal Tax Rates – Residents

For a budget to be effective it must be accurate and realistic!

Here’s what you’ll need.

• A record of day-to-day spending.  Receipts from shopping, and bank statements and bills from the past three months. These will show regular expenses like rent, mortgage, car loans, credit cards, phone, power and insurance.  Credit cards need to be used very carefully, but can be an effective may to track your spending.
• A list of annual costs. These are things you pay for less regularly like car registration, rates, medical expenses, gifts and holidays.
• Income information.  Any money you receive such as your salary, other employment benefits or allowances, investment income and social security entitlements.

Many banks provide tracking tools which categorise your income and expenses for you.  Using these will definitely help you create your budget.

We can also provide you with a budget planner to complete and review on an ongoing basis.

Cash flow is simply the movement of your income and outgoing money.  Cash flow can be broken down into:

Cashflow is critical to a financial plan as it will identify potential issues or opportunities.  To be able to save and invest, your cashflow needs to be positive, that is your income is greater than your outgoings.  For some people, saving comes naturally, for others not so.  Regardless, having a documented budget which you actively follow and track could help you achieve your savings and investment goals.

The income and asset test thresholds depend on whether your are a homeowner or non-homeowner and also whether you are single or a member of a couple.

Asset test thresholds

20 September 2020 – 19 March 2021

Income test thresholds

20 September 2020 – 19 March 2021

If you receive income support from Centrelink and pay rent to a private landlord for accommodation, you may qualify for rent assistance.  Rent assistance is paid in addition to a pension, allowance or benefit that you may receive.

You may qualify for rent assistance if you pay more than a certain amount for:

• rent (other than for public housing)
• fees paid for a caravan site or similar, which you occupy as your principal home
• service and maintenance fees in a retirement village (special rules apply)
• fees paid to moor a vessel you occupy as your principal home, or
• lodging (if you pay for board and lodging it is generally two thirds of the amount paid unless the payment for lodging is identifiable).

The type of concession card you may be eligible for will depend on how much income you earn and whether you are receiving income support payments from Centrelink.  There are many rules associated around who may qualify and we below table summaries the majority of situations where you may be eligible to receive one of these cards and the benefits included.

The main types of concession cards include:

• Pensioner concession card
• Low income health care card
• Commonwealth seniors health card

The pensioner concession card is automatically issued to Centrelink pensioners and is the most valuable of the cards, as it provides the greatest number of benefits and concessions.

The Low income health care card is not age based but is subject to an income test.

The Commonwealth seniors health card is available to self funded retirees who have reached age pension age and meet an income test.

Deeming is a set of rules Centrelink use to work out the income created from your financial assets. It assumes these assets earn a set rate of income, no matter what they really earn.

The deeming rates are different for single people and couples and are as follows:

Single

Couple

If you’re in a living arrangement with your partner and only one of you is eligible for the Age Pension, Centrelink will treat you as a couple and count your combined income and assets to determine how much age pension you are entitled to.  There are some assets which are not counted by Centrelink, which include your home and any money invested in superannuation where the owner is not of age pension age.

If you’ll be away overseas for longer than six weeks (for example, if you’re going on an extended trip or planning to move overseas permanently), then you must inform the Department of Human Services (via Centrelink).

You can continue to receive the base rate of the age pension while you are overseas but if you are away for an extended period of time, you may not be entitled to the pension supplement and energy supplement payments.

If you were born after 1 January 1957, you will be eligible for the age pension when you reach age 67.  If you were born before this date, the age you qualify depends on your date of birth:

If someone dies without a Will, they die ‘intestate’. Being intestate means the laws of the state or territory the person lived in will decide how their estate (their assets and liabilities) is administered. This might mean your assets do not end up with the person you would have chosen.

A person’s assets include their property, investments and belongings that have value, such as a house, car, bank accounts and non-super investments. A person’s liabilities consist of any money they may owe, such as a mortgage or a loan.

Wills can be as simple or as complicated as you wish, but your family will always be better off if you have one.

A good rule of thumb is to review your estate plan every five years. However, it is important to review your will and possibly update it with each significant change in your life such as:

• Getting married or entering a defacto relationship – will you combine your assets or keep some separate?
• Buying a home – this is often your biggest asset so consider who it will be left to.
• Having children – who will you appoint as their guardian? When will they be allowed to take over their inheritance? Be aware that legally they will inherit at 18 unless otherwise specified.
• Getting divorced.

Estate planning is more than just having a will.  It’s about:

• Minimising tax
• Ensuring your superannuation assets are considered in conjunction with your estate’s assets so they are distributed to your beneficiaries in the most tax efficient way.
• Ensuring ownership and control of your assets are passed on to your intended beneficiaries.
• Providing protection over your assets if the beneficiary falls into legal trouble (e.g. divorce, bankruptcy)

By making an enduring power of attorney, you are choosing who you want to manage your financial affairs or make medical decisions on your behalf if you lose mental capacity.  It is the only way you can have control over who will make decisions on your behalf should you are ever be unable to do so yourself.

There are three specific types of Enduring Powers of Attorney in Victoria:

1. Enduring Power of Attorney (Financial)
2. Enduring Power of Attorney (Medical Treatment)
3. Enduring Power of Guardianship.

All Powers of Attorney will cease on death and you can change them at any time if required.

Anyone of your choosing can be a beneficiary of your will.

When nominating beneficiaries for superannuation, the beneficiary must be an eligible beneficiary (such as your spouse, children or other financial dependents) for the nomination to be valid.

As superannuation does not part of your Estate, you need to record a binding nomination on your super scheme.  There are two types of binding nominations namely Non-Lapsing Binding Nominations or binding nominations which may have to be renewed every three years.

Binding nominations can only be made to dependent beneficiaries (such as your spouse, children or other financial dependents) or to your estate.

Any insurance owned via your superannuation scheme will be effectively be covered by the binding nomination on your super.  The insurance proceeds will be paid to your superannuation fund and then distributed according to your nomination.  It is important to understand there can be significant tax consequences if insurance proceeds within super are received by non-dependent beneficiaries.

If you do not have a binding nomination recorded on your superannuation, the Trustee of the super fund will determine who receives your account balance and any insurance proceeds if applicable.

The Executor of your will can be anyone you choose, but it should be someone you trust implicitly and also someone who is capable of handling the role.

It is a common myth that an Executor cannot be a beneficiary  but this is not true.  The executor is the person who carries out your final wishes and is responsible for distributing assets, but they can be a beneficiary and receive assets as well.

Anyone over the age of 18 can have a Will and, in many cases, people put off writing a Will for far too long.  Its always better to organise your Will sooner rather than later, but events such as entering a defacto relationship, having children or getting married make having a will even more important.

While the Australian Government provides funding to residential aged care homes to assist with the costs associated with providing care, most residents will have to pay fees and charges.

Major reforms to the aged care system, including the way fees and charges are calculated, apply to residents who first enter residential aged care on or after 1 July 2014, or who move to aged care facilities and choose to be assessed under the new rule.

One of the key changes is that all aged care facilities will be subject to the same fee structure, regardless of the level of care the resident requires.

There are two main types of fees payable for aged care:

• Accommodation payments
• Ongoing fees

The accommodation payment is det by the aged care facility and can be paid as a lump sum (RAD) or a daily amount (DAP).

The ongoing fees include the basic daily fee and can also include a means tested care fee and an extra services fee.  The basic daily fee is the same for everyone, but as the name suggests, the means tested care fee will depend on your financial means.

Some aged care facilities are approved by the government to provide extra services across the whole facility or in a designated part of the facility. In addition to designated extra service facilities, some standard aged care facilities offer extra services on an opt-in basis.

Extra services mean that the facility will provide you with a higher standard of accommodation and services, which you will pay for in the form of a daily extra service fee. Extra services may include a choice of meals, wine or massages. Accommodation and services vary from one facility to another, so you will need to check with the provider for details of services and extra service fees.

Older people needing access to greater levels of support may compare retirement villages against residential aged care services, and view them as substitutes. While both provide supportive environments for older people, it is incorrect to view them as substitutes.

Retirement villages offer the opportunity to live in a community of older people. Maintenance of the external building and community garden areas is provided by the village operator. But it is still independent living.

In a retirement village you may be able to choose to access support and assistance inside the home, but at an additional cost. The services available vary from one retirement village to the next. You need to have the financial capacity to meet the costs as these care services are not subsidised by government. You may, however, qualify for government subsidised home care packages.

Residential aged care services bundle together fully supported living and care supports with accommodation. This care is provided 24/7 and is very heavily subsidised by the government.

The RAD (Refundable Accommodation Deposit) is effectively the price of a room set by an aged care facility.

The most expensive room is around $2 million with the average across Australia just over $400,000. But if the thought of paying $400,000 or $500,000 or $800,000 or more for a room in residential aged care scares you, you may find it reassuring to know that you have choices.

With most decisions on where to live, you can choose to buy or rent. Aged care is the same. While the prices are quoted as a lump sum you have the choice to pay the lump sum and “buy” the right to live there or to pay a daily fee and “rent” the right to live there.  The daily fee option is called a DAP (daily accommodation payment).

The potential need for aged care can be a difficult and emotionally loaded conversation for family members.  Many parents and their adult children avoid talking about it until they have no choice, by which time it is often too late for any effective planning

Residential aged care is a complex area so getting the right professional financial advice can make all the difference in ensuring you or your loved ones assets and income are structured effectively, minimising any changes to your pension payments, and ensuring you have sufficient income to support your care needs.

Nobody wants to admit to themselves that their parents have grown old and frail. It’s a stark reminder that time marches on and life is not forever.  But there are certain realities that must be faced if we are to keep our loved ones safe.

Here are some signs to watch out for which, if they are occurring more frequently, may point to Mum or Dad needing some extra help:

• Missed appointments
• Appliances left on
• Unclean house
• Unexplained dents in the car
• Empty fridge or spoiled food
• Poor personal hygiene
• Forgetting to take medications

Spotting one or more of these clues is not necessarily cause for alarm in itself; it may just be an isolated incident. But if there are multiple instances of one or more, it may be time to chat to mum or dad about ‘getting some help around the house’. Help from family members may be easier for them to accept in the short term. If this is not possible, you may need to consider paying for support services like house cleaning, shopping and gardening. You can also contact the Myagedcare hotline on 1800 200 422 to request an aged care assessment to determine your parents’ eligibility for government subsidised services.