Financial Planning for Aged Care

Aged Care: 18 March 2019

Entering an aged care facility or assisting a family member to do so can place great demands on your time and patience. Important decisions need to be made, but they can come with a shorter than comfortable deadline.

Aged care can be very costly, and the family home may need to be sold to fund entry to a facility and other money made available to pay for ongoing care. Few people are aware that how a sum of money put aside to fund Aged Care costs is invested can affect the amount of care fees payable as well as Age Pension entitlements. Careful planning can help ensure you and your family's needs are met.

The ideal arrangement for investing a sum of money to fund ongoing Aged Care facility costs would:

• Eliminate or reduce income-tested aged care fees.
• Be Age Pension friendly.
• Provide eligibility for the senior's card.
• Minimise Centrelink paperwork.
• Provide tax-effective income for seniors.
• Provide a known death benefit.
• Provide cash flow to pay fees.

There are many investment options available to fund Aged Care costs, however none of them meets all criteria and a balance is usually struck between competing needs. This situation has never been optimal and to provide a better solution Challenger has developed the only 'out of the box' solution currently on the market with the Care Annuity.

Investing for aged care a new solution

The Care Annuity provides benefits that other solutions do not, and could provide an optimal overall outcome when compared to other options.

Challenger Care Annuity

• Provides a fixed earnings rate.
• Can reduce or eliminate income-tested aged care fees.
• Is treated beneficially for social security purposes through favourable income and assets test treatment.
• Is tax-effective.
• Provides 100% money back if you die within the first 10 years.
• Can be withdrawn at any time during the first 10 years (the amount you get back may be less than the amount you invested).
• At the end of year 10 you can choose to receive 100% money back or choose to continue to receive payments for the rest of your life regardless of how long you live (it will cease to have a withdrawal value).
• Can assist people to get the Commonwealth concession card if they are not already eligible.

Note: Withdrawals comprise both income and capital and death benefits are only payable to the estate.

Risks

As with all investments, there are risks associated with investing in the Challenger Care Annuity. These risks are set out in the product disclosure statement and we recommend you go through them with your financial adviser before making any investment decision.

For more details please contact\:

Rob Camilleri 
Blue Sky Financial Planning 
03 9822 9877
rcamilleri@bskyfp.com.au