It’s natural as you prepare to move into retirement living or aged care to be concerned for your finances – and in particular, the Age Pension.
You may be worried that, because of means testing, the lump sum you get from selling the family home to downsize to a retirement village unit will leave your pension slashed – or gone entirely.
Fortunately, planning your finances can be a bit easier nowadays, as many retirement village operators offer a choice of entry prices for homes, as well as the option to pay a larger amount upfront and a smaller amount when you leave so you can maximise your pension.
Be sure to ask for options when you find the retirement village home you want – and always get financial advice from a qualified professional. It’s also wise to check regular village fees, such as for maintenance, so you don’t get any nasty surprises; fortunately, most operators won’t charge more than 30% of the pension in fees.
What about aged care?
It’s not unusual for older couples to have one person living in a residential aged care home, receiving the Age Pension or Disability Support Pension, while the other (who may have been receiving carer payments) needs to return to work to support themselves.
Unfortunately, while the pension would cover 85 per cent of aged care fees, the fact that their partner is now earning income may, again, reduce or even eliminate the payment. This means that the partner living at home would have to pay the aged care fees by themselves – and thus have even less to live on.
If you find yourself in this situation, your first step should be to go to a financial planner, like Sydney Aged Care Financial Advisors, with extensive and specialised experience in aged care.
They can help you manage your finances, and possibly help you apply for the Government to recognise you as a couple “living separately and apart”. This term, from the Aged Care Act, is used for a couple where one member is “institutionalised due to a severe and debilitating condition”, such as dementia.
You’ll need to fill out a Mod S form, available from Services Australia, to get the ball rolling. While it isn’t suitable for everyone, if this status is approved, your assets will be kept separate from your partner’s – meaning the amount one of you earns won’t affect the other’s pension.
Are there other payments available?
If you’re not eligible for the Age Pension or Disability Support Pension, there may still be Government support open to you. Services Australia’s Payment and Service Finder Tool can help you find payments or other support you may be eligible for, such as the Parenting Payment, Austudy, ABSTUDY, and the Pensioner Concession Card.
In addition, the Federal Government offers non-taxable, low-interest “reverse mortgages” under its Home Equity Access Scheme. This scheme allows older Australians to unlock the equity in their homes and receive either lump-sum or fortnightly payments of up to 150 per cent of their maximum pension rate.
Making the big move into a village or an aged care home is a huge change – so plan ahead, and don’t let your worries about the pension make it any more complicated than it needs to be.