Tag Archives: Lifestyle

Your options in aged care explained

By Robert Wright /June 26,2017/

With multiple avenues to explore, thinking about aged care earlier rather than later could provide you or your loved one with greater flexibility.

It’s possible that in the future you, or someone close to you, may need some form of care or daily living assistance. With lots of information to sift through and the conversation sometimes a tricky one to approach, we’ve pulled together some information to make navigating aged care an easier process.

The current state of affairs

The Australian government has projected that in 40 years the number of people aged over 100 will be 300 times what it was in the mid-1970’s[1], with an ageing population shining a light on aged care services.

Meanwhile, industry figures show[2]:

More than 50% of people over age 45 have previously, or are currently, dealing with aged care services for themselves, or on someone else’s behalf.
The likelihood a woman over age 65 will require residential care in her lifetime is 54%. For men, that figure is slightly lower at 37%.
The total cost of aged care in Australia is projected to reach around $290 billion by 2055.

Aged care services available

There are several types of aged care services available. Each has an eligibility criteria and an assessment process which can be organised through the government’s My Aged Care initiative.

Options include:

Help in your own home – if you are generally able to manage, but require assistance with daily tasks, there are various home-care packages available.
After-hospital (transition) care – if you’ve been in hospital, but need assistance while you recover and additional time to think about the best place to live long-term, this type of service can be provided in your own home or ‘live-in’ setting for 12 to 18 weeks.
Respite care – this service provides support for you and your primary carer when your carer has other duties to attend to, or when they’re on holiday.
Residential aged care – this is where you live in full service residences and receive ongoing care and support. If it’s the best option for you, it’s a good idea to research and visit several residences to find the right place in terms of location, services and activities.
Short-term restorative care – this provides a range of services over eight weeks to help prevent or slow down difficulties with completing everyday tasks. It aims to improve wellbeing and independence, and delay or reverse the need to enter long-term care.

The costs

The costs for after-hospital, respite and short-term restorative care depend on the level of care and how long it’s required.

The fees for an at-home-care package or residential aged care can also vary and will depend on income and assets, as assessed by the Department of Human Services or the Department of Veterans’ Affairs.

With a residential aged care facility there may be one-off payments (or deposits), as well as ongoing fees for care, accommodation and daily living expenses.

If you’re a self-funded retiree, it’s a good idea to seek an income assessment before commencing an at-home-care package or entering residential aged care to avoid paying maximum fees and charges.

Having the discussion

Deciding to have a discussion is the first step. So, if you’re in a situation where you need to approach the topic of aged care, whether it’s for yourself or a loved one, it’s better to do it sooner rather than later.

Remember, it may not be easy and it’s fairly normal for people to resist this type of conversation. For this reason, it’s a good idea to approach the topic as a series of conversations so that you (or your loved one) are in a better position to articulate what you want to happen.

Things worth considering when approaching the topic include:

Being deliberate about the time and place for these conversations
Thinking about whether other family members should be included
Whether relevant paperwork is accessible and in order
Whether third parties, like the family doctor, could help by offering their perspective.

There are complexities and tax implications to work through when it comes to aged care, including for example whether or not to sell the family home, so it’s a good idea to get professional advice.

Source: AMP

[1] http://www.treasury.gov.au/PublicationsAndMedia/Publications/2015/2015-Intergenerational-Report

[2] https://www.superannuation.asn.au/media/media-releases/2015/media-release-26-november-2015

How to cope with losing independence

By Robert Wright /March 02,2017/

If you or a loved one is experiencing a loss of independence, you may be able to maintain a sense of control.

Few, if any of us, look forward to losing independence. In fact, research reveals that 75% of older people feared losing independence while only 29% feared dying[1]. It also revealed that 44% were worried about moving into an aged care facility.

Whether a physical, social or emotional reason prevents complete independence, it generally brings a sense of loss.

Understanding the cycle of loss

As people age, the loss of independence can stem from physical and mental changes, and social and emotional effects that dramatically alter day-to-day life.

For example, physical changes like diminishing vision or a loss of hearing can interfere with the performance of simple tasks like driving, walking long distances or communicating in general. Mental impairment can cause people to lose the ability to perform everyday tasks and become forgetful.

Such changes increase the need for help from others and add to feelings of dependence and inadequacy, while lowering confidence and stopping some people from participating in enjoyable activities. The overall impact can increase feelings of frustration, anger, guilt and isolation.

Adding to the burden may be well-intentioned loved ones who place restrictions on the person losing independence out of concern for their wellbeing. And the need to accept help often reinforces feelings of helplessness.

Increasing a sense of control

We all have a common need to retain some sense of independence and dignity while feeling we are making a valid contribution.

Some people facing a loss of independence may have previously been quite dependent on others—perhaps never holding a driver’s licence and relying on friends and relatives to drive them around.

But for many, a newfound dependence on others can be very difficult. The more capable and independent a person was in the past, the greater the loss experienced.

There are things you and your loved ones can do to increase the sense of control:

It’s your life, keep control

If you are experiencing a loss of independence yourself, make sure your loved ones know how you feel and what you need to live a life that continues to have meaning for you. For example, if you feel loved ones are micromanaging your every move, let them know how they can help you feel more independent and how they can support you to exert your right to make choices.

If the loss of independence is getting you down there are also support services available like Beyond Blue (P: 1300 224 636) or My Aged Care (P: 1800 200 422).

Loved ones, be reactive not too proactive

If your loved one is experiencing a loss of independence, it’s understandable for you to be concerned about them. It can be tempting to take the initiative and provide help, but it may be more effective in the long run to first speak with them, if possible.

The two most important questions you can ask are whether they need help and how it would be best for you or others to provide it. Letting your loved ones have a say in the help they receive can ease the emotional impact.

Facilitate

However you end up helping—and you may feel that you’re walking on eggshells sometimes—take care with how you go about it. If you’re able to facilitate a conversation so your loved one comes up with their own solutions and ideas, it’d be a better outcome for them, and possibly the most generous thing you can do.

Encourage

If possible, encourage your loved one to keep pursuing their passions or find new hobbies. Help them maintain their relationships with family and friends too. Perhaps you can help by finding activities they may be interested in.

Seeking knowledge and assistance

If you or a loved one is experiencing a loss of independence, you may benefit from further information about aged care. Please contact us for further information.

Source: AMP

[1] http://www.dlf.org.uk/blog/losing-independence-bigger-ageing-worry-dying

What financial records do I need to keep?

By Robert Wright /March 02,2017/

Ever feel like you’re drowning in a sea of paper? Tame the paperwork today and reap the rewards tomorrow.

Life can be complicated enough without all the administrative paperwork that often accompanies it. This is particularly true when it comes to your personal finances.

If stacks of old bank statements, utility bills, receipts, insurance and superannuation documents mean you can’t see the trees for the paper, de-clutter, simplify your finances and improve your quality of life today.

Why simplify?

There are many good reasons to pare back on your financial record-keeping, including:

Living in smaller dwellings means we have less space to store documents
Saves time by making it easier to find what you need
Helps your loved ones find relevant documents easily should something happen to you
In the event of a home emergency, you can quickly find important documents you may want to take
Makes your life easier at tax time.

What you need to keep

When it comes to identifying the documents you need to keep, considering your legal obligations is a good place to start.

The first of these is your annual tax return. In order to complete your tax return you’ll need documentary evidence of:

all payments you’ve received, such as wages, interest, dividends and rental income
any expenses related to income received, such as work-related expenses or rental repairs
the sale or purchase of assets, such as property or shares
donations, contributions or gifts to charities
private health insurance cover
medical expenses, both your own and those of any dependents

You need to keep these documents for five years after you lodge your tax return in case you’re asked to substantiate your claims, and it’s also a good idea to keep your notice of tax assessments for five years. However, if you run a small business, the document requirements and timeframes differ – find out more at the Australian Tax Office (ATO).

The second category of documents are those related to property such as:

property deeds
home loan documents
renovation approvals
warranties relating to work undertaken

The Australian housing market – surging unit supply, the economy and what it all means for investors

By Robert Wright /November 23,2016/

Housing matters a lot in Australia. Having a house on a quarter acre block is part of the “Aussie dream”. Housing is a popular investment destination. And the housing cycle is a key component of the economic cycle and closely connected to interest rate movements. But in the last 15 years or so it has taken on a darker side as a surge in house prices that started in the late 1990s has led to poor affordability and gone hand in hand with surging household debt.

Reflecting this, predictions of an imminent property crash bringing down the Australian economy have been repeated ad nauseam since 2003. This note looks at the risks of a property crash, particularly given the rising supply of units, implications from the property cycle for economic growth and how investors should view it.

High house prices and high debt

The big picture view on Australian residential property is well known. First, Australian housing is expensive. According to the 2016 Demographia Housing Affordability Survey the median multiple of house prices in cities over 1 million people to household income is 6.4 times in Australia versus 3.7 in the US and 4.6 in the UK. In Sydney it’s 12.2 times and in Melbourne it’s 9.7 times. The ratios of house price to incomes & rents are at the high end of OECD countries and have been since 2003.

Second, the surge in home prices has gone hand in hand with a surge in household debt, which has taken Australia’s household debt to income ratio from the low end of OECD countries 25 years ago to now around the top.

How did it come to this?

While it’s common to look for scapegoats to blame for high home prices and debt, the basic driver looks to be a combination of the shift from high to low interest rates over the last 20-30 years which has boosted borrowing and buying power and the inadequacy of a supply response (thanks to tight development controls, restrictive land release and lagging infrastructure) to suppress the resultant rise in the ratio of prices to incomes.

A home price crash remains unlikely

The surge in prices and debt has led many to conclude a crash is imminent. But we have heard that lots of times over the last 10-15 years. Several considerations suggest a crash is unlikely.

First, we have not seen a generalised oversupply and at the current rate we won’t go into oversupply until around 2017-18.
Second, despite talk of mortgage stress the reality is that debt interest payments relative to income are around 2004 levels.
Third, Australia has still not seen anything like the deterioration in lending standards seen in other countries prior to the GFC. In fact in recent years there has been a decline in low-doc loans and a reduction in loans with high loan to valuation ratios.
Finally, it is dangerous to generalise. While property prices have surged 60% and 40% over the last four years in Sydney and Melbourne, they have fallen in Perth to 2007 levels and have seen only moderate growth in the other capital cities.

The risks on the unit supply front are a concern

To see a property crash – say a 20% plus average price fall – we probably need to see one or more of the following:

A recession – much higher unemployment could clearly cause debt servicing problems. This looks unlikely though.
A surge in interest rates – but rate hikes are unlikely until 2018 and the RBA knows households are more sensitive to higher rates so it’s very unlikely rates will reach past highs.
Property oversupply – as noted above this would require the current construction boom to continue for several years.

However, the risks on the supply front are clearly rising in relation to apartments where approvals to build more apartments are running at more than double normal levels.

Due to the rising supply of units, vacancy rates are trending up & rents are stalling, making property investment less attractive.

Outlook

Nationwide price falls are unlikely until the RBA starts to raise interest rates again and this is unlikely before 2018 at which point we are likely to see a 5% or so pullback in property prices as was seen in the 2009 & 2011 down cycles. Anything worse would likely require much higher interest rates, or recession, both of which are unlikely. However, it’s dangerous to generalise:

Sydney and Melbourne having seen the biggest gains are more at risk and so could fall 5-10% around 2018.
Price growth is likely to remain negative in Perth and Darwin as the mining boom continues to unwind but this should start to abate next year.
The other capitals are likely to see continued moderate growth and a less severe down cycle in or around 2018.
Units are at much greater risk given surging supply and this could see unit prices in parts of Sydney and Melbourne fall by 15-20% as investor interest fades as rents fall.

The property cycle and the economy

Slowing momentum in building approvals points to a slowdown in the dwelling construction cycle ahead. While this might be delayed into 2017, as the huge pipeline of work yet to be done is worked through, slowing dwelling investment combined with a slowing wealth affect from rising home prices mean that contribution to growth from the housing sector is likely to slow. However, as this is likely to coincide with a fading in the detraction from growth due to falling mining investment and commodity prices it’s unlikely to drive a slowing in the economy.

However, a likely decline in rents (as the supply of units hits) will constrain inflation helping keep interest rates low for longer.

Implications for investors

There are several implications for investors:

Firstly, over the very long term residential property adjusted for costs has provided a similar return to Australian shares. Its low correlation with shares, lower volatility but lower liquidity makes it a good portfolio diversifier with shares. So there is clearly a role for property in investors’ portfolios.
Secondly, there remains a case to be cautious regarding housing as an investment destination for now. It is expensive on all metrics and offers very low income (rental) yields compared to other growth assets. This means a housing investor is more dependent on capital growth.
Thirdly, these comments relate to housing in aggregate and right now it’s dangerous to generalise. Apartments in parts of Sydney & Melbourne are probably least attractive but for those who want to look around there are pockets of value.
Finally, investors need to allow for the fact that they likely already have a high exposure to Australian housing. As a share of household wealth it’s nearly 60%. Once allowance is made for exposure via Australian shares it’s even higher.

Source: AMP