Case study: A family navigates the aged care financial maze 

Sarah* has lived out the nightmare of putting her elderly parents into aged care – and she now wants to smooth the path for others.

About two years ago, she noticed during phone calls to her interstate-based parents, John and Glenda, that they were showing signs of cognitive decline and that “things just weren’t’ right”. So, she moved back to Victoria to help them manage their shift into aged care.

“There was a lot of emotion around the move and a lot of guilt having to put them into aged care,” Sarah says. “But because of their health there were no other appropriate alternatives.”

Financial counsel close at hand

As Sarah can attest, a move into aged care can cause headaches – from selling off assets and dealing with Centrelink, lawyers and accountants, to selecting a facility that suits the needs of loved ones.

The scariest element for her was assessing and managing the financial implications of the shift for her father, a former biochemist, and her mother, an ex-flight attendant. Questions about the long-term costs and fees associated with aged care quickly consumed her mind, while she was also conscious of trying to preserve her parents’ government pensions.

“They’re by no means rich people,” Sarah says. “They’re just ordinary Australians who’ve worked hard their whole life and I wanted to protect their financial situation.”

The lightbulb moment for Sarah came when she decided to contact Care & Living with Mercer (CaLM), a service that helps families understand, navigate and plan ageing care and living needs for the elderly. The CaLM team also connected Sarah with a financial adviser from Mercer Financial Advice.

The adviser proved a godsend, offering specific aged care financial planning strategies (see panel) that provided financial gains and surety for the family. “They were just so wonderful,” Sarah says.

Making sense of aged care options

Like many retirees, Sarah’s parents had most of their assets tied up in their house. This meant they could not initially pay the full Refundable Accommodation Deposit (RAD) that is required by an aged care facility and which, as the name indicates, is a refundable deposit paid when a when a person leaves the facility.

As a result, they had to pay daily accommodation fees – which are typically more expensive overall – until they could sell their house.

During this period, the financial adviser pored over seemingly endless paperwork for the family and provided financial options. Her financial counsel included ensuring that Sarah’s father’s will was structured appropriately. There were fears that Sarah’s mother, in the event of John’s death, could have suffered financially and lost her pension if money from the sale of their house and RAD refunds pushed her finances over certain limits. Ultimately, once the house was sold, the family had some money left over which was used to buy fixed-term annuities.

Receiving the support of a financial advice team at such an emotional time when she was so emotionally drained proved invaluable for Sarah.

“To be honest, you’re really focused on the care for your loved ones, rather than any of the financial stuff,” Sarah says. “You’re trying to navigate a situation where you have no idea of the hoops and legalities you have to jump through.”

Creating financial wellbeing

Sadly, Sarah’s father died late last year, but she can reflect with satisfaction that she did everything she could for her parents. “It was a tough period for us all, but they were very grateful for what I did for them.”

Importantly, her mother continues to be well looked after financially and in terms of her care, despite the loss of her long-time partner. “Mum’s got lots of people around her,” Sarah says. “And she gets to keep her pension and she’s in a good position financially.”

For that, she makes special mention of the work of the adviser and the Mercer financial advisory team. Sarah acknowledges that specialist aged care financial planning advice comes at a cost, “but the fee for service I paid was small in comparison to what could have happened if I hadn’t sought financial assistance”.

She is also hopeful that her story can encourage others to act quickly and sound out aged care options faster than she did.

“If I can jolt just one person into action that will make me feel good.”