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Balance Retirement & Aged Care Specialists

Is it better to pay a bigger RAD?

RUTH (82) decided to sell her home to pay the Accommodation Payment all as a RAD (ie Lump Sum), leaving her $462K in the bank. The Aged Care facility she chose had a range of Accommodation Payments $595K, $650K, $750K, $850K & $950K. The bigger the room price, the bigger the room or with nicer views.
She was thinking that paying $595K would give her a better outcome than if she paid more.

However, the work we do (Aged Care Options) also demonstrated the financial outcome of the different room prices, which showed Ruth that the actual difference between the cheapest room & the most expensive room was only $749pa difference. i.e. there is more to this than just comparing the RAD (the Accommodation Payment as a Lump Sum), you also need to understand how the different RAD’s affect the pension entitlement, the Means Tested Fee, & most importantly the cash flow, i.e. the total income versus total expenditure.

Once she saw this RUTH made a quick decision to take the $950K room, as the room was bigger & had a balcony, & was light, bright & airy, & had better outlook.
It is common that our clients make a different decision once they have seen a full financial comparison, not just compared the different RAD’s. Ruth said “ I would have picked the cheaper room if I hadn’t sought your expertise” & then “The more expensive room is so much better for only $749 a year more”.