How does super affect aged care?

Making decisions around moving into residential aged care can be overwhelming. There is a lot to consider, starting with which facility has the best care available, the best location, and the level of care required.

Then there are the financial details. How will the accommodation be paid for, what government subsidies are available, how does the payment system work, how will moving into care affect a person's income stream, and how will it impact their assets?

For people dealing with the process for the first time it can be a confusing and emotional time, of worrying if you're doing the right thing. Then there's the unfamiliar jargon like RAD and DAP to get your head around.

These days there's an extra asset that has to be considered that previous generations didn't have to think about so much - superannuation - usually a person's largest asset outside of their home.

Since compulsory superannuation as we know it today was introduced in 1992 to help workers fund a comfortable retirement, Australians have saved more than $3.3 trillion in superannuation.

Toby Perkins, a financial planner specialising in aged care with leading Australian super fund, NGS Super, said questions about super and how to best manage it when planning entry into aged care are some of the most common he receives from his many customers.

"Financially there is much to review and understand for people to be able to make informed decisions," said Mr Perkins.

"The question of whether to keep the family home is probably the big one, but there is also a lot of confusion about issues relating to super and the best options.

"It could be questions like how super savings affect the assessment when people enter aged care, if they need to use their super to pay an accommodation deposit or contribution, and what the best way is to fund the ongoing fees and costs. It's different for each individual depending on their circumstances."

Demand for aged care is growing rapidly. In 2022, approximately 407,000 people were using residential aged care, home care or transition care in Australia. A recent Productivity Commission report into Caring for Older Australians found that by 2050 more than 3.5 million Australians will be using aged care services.

For many confronted with the raft of decisions required when they or someone in the family needs to move into residential aged care, it's the first time they've negotiated the highly regulated aged care system and find the pressure of making the right financial decisions overwhelming.

"Often, the person entering aged care is not the person making the financial decisions," said Mr Perkins.

"It's often a relative or partner having to deal with it at an already difficult and emotional time so it's valuable to find a financial planner who is experienced in working with family members of the person entering aged care."

A good financial planner will be able to discuss your best financial options, no matter what your life stage and needs. Aged care financial advice is very specific, and it's best to connect with a planner specialised in the sector.

"If you or a family member need help with aged care advice, ask your planner if they have expertise in this area and how they will be able to help you achieve your goals," Mr Perkins said.

"At NGS for example we have planners accredited in aged care financial planning.

"My focus is always on ensuring my client understands their options to best maximise their financial position. There are always technical components when it comes to finances, and sometimes it's not always easy to understand. I see my role as someone who can simplify the process and discuss the options so they have the information needed to make the best decisions."

This is part of a series of articles to help you prepare financially for the various stages of life. Each month, an NGS Super expert will answer your questions. Got a question? Just email it through to ASKNGS@ngssuper.com.au

The information provided is general information only and does not take into account your personal objectives, financial situation or needs. Before acting on this information or making an investment decision, you should consider your personal circumstances and read our Product Disclosure Statement and Target Market Determination available at ngssuper.com.au for more information.