Author: Andrew Wem, Wealth Adviser & Lending Specialist

As life expectancy in Australia increases, the need for a comprehensive Aged Care has become more important. One of the most important matters that need to be addressed when discussing Aged Care is ensuring an effective cash flow that will support you or your loved one.

Effective Cash Flow

As discussed in the previous articles, there are many types of Aged Care entry fees and ongoing cost which need to be covered. Some of these costs can be reduced through careful planning and selecting the right facility, other costs are fixed.

However, the main concern for clients is how can we find these ongoing costs on a monthly basis after paying the large entry fees?

Remember, that you are given 28 days after entering care to inform the facility on how you can pay the entry fees. This gives us plenty of time to plan how you can pay the fees and structure your assets for the ongoing costs.

Having a Full Aged Pension

Once we have done all we can to minimise your fees, we then need to understand your cash flow needs so we are able to plan funding the ongoing costs.

If you receive a full age pension then you will only need to pay the Daily Care fees which are set at 85% of the Aged Care pension – hence you should generally be able to afford the cost of your care as your pension covers them. Should you own your own home then you may also have an additional cost which may need to be discussed.


Part/No Pension At All

If you are only receiving a part-pension or no pension at all, then we may need to vary your entry payment or make changes to your assets in order to help fund these costs.


Some of the options may include:

  • Selling or renting your former home
  • Investing in Annuities or other investment that produce income
  • Drawing some of the fees from your Refundable Accommodation Deposit (RAD)
  • Or partly paying the RAD to retain more cash to pay the ongoing fees


Building a Buffer

We all like to keep some cash for a rainy day and as you get older this is normally set aside to cover any urgent medical bills. We recommend that you retain a buffer of around $20,000 for emergencies as a minimum.

There are also necessities that you may still need to pay for like haircuts, podiatry and prescriptions to name a few.

In many cases, by the time you need to enter care, your expenses will be relatively low. Although we acknowledge that everyone is different, we normally would use a figure of $100 per week required cash flow to cover weekly expenses.

So what can you do to help?

  1. Construct a budget – understand your current spending habits and cash needs
  2. Understand your income and where it comes from
  3. Determine what is most important to you? i.e. cash flow, retaining your home, wealth preservation, etc.

What is next?

Once we understand your goals and desires, we can review your options and develop a strategy that will work for your situations once you enter care. We will typically model 4 or 5 options for you, so you can then decide which option you prefer based on the projected cash flow and wealth preservation achieved over 5 years.

So if you are thinking about Aged Care for yourself, your parents or a loved one and wish to understand how you can cash flow the costs, please give me a call to arrange a meeting.

The Navwealth Solution

Call Navwealth for an initial discussion about your situation and we can help you understand the steps involved in determining the appropriate care, finding a suitable place, ensuring it is affordable and structuring an effective cash flow.

In my next article, I will discuss Estate Planning. I will what you can currently do and why estate planning is important.

For more information or to discuss the Aged Care needs for yourself or a loved one, please contact Andrew Wem, an accredited Aged Care Specialist Adviser, on or (02) 9008 3000.