Nan has to pay What!!

We attended an open day recently at a brand new state of the art Aged Care facility. Yes you would describe it as 5 star *****.

Nikki  Gemmell  wrote in W.E. Australian 2/3/13 100 Not out  a very reassuring article on her Nan who ‘At her 100th birthday party she looked healthy, engaged, chuffed’.

If you have ever stayed or dined at a five star hotel or resort  then you may find as we did recently for a birthday dinner that you suffer from ‘Bill Shock’.

We were provided a guided tour along with a couple who were planning ahead. It is state of the art although Lex  asked if Wi-Fi was available & it will be but not today. Maybe a brickbat as the hotel reviewers would say. Probably the only one.

We completed the tour & then to the facility folder with the details.

There was the Accommodation Bond which we have explained before & remember it is refunded to the estate minus a maximum of $19,380. They weren’t small &  recall you must be left to 41,500.

Bonds vary according to whether you want or need a shared or single room.

However as they say ‘and there is more’.  There are daily charges as well.

1.       If you are ‘ defined’ medically by ACAT  &  enter high-level care then you may be asked to pay an ongoing accommodation charge instead of an accommodation bond.

As with the bond, each charge is negotiated individually taking into consideration the person’s assets at the time of entry.

Residents with less than $41,500 in assets will not pay the charge. Residents with more than $109,641 in assets will pay the maximum charge which is currently $32.76 per day.

Residents who pay a charge can rent out their former family home and it will remain indefinitely exempt from the social security assets test. In addition, the rental income will not count towards the social security income test or the income-tested fee .

2. Basic daily fee

The basic daily fee is paid by all residents as a contribution towards the costs of daily living such as meals, cleaning, laundry and heating.

Standard residents [Full pensioners and part pensioners ]currently pay $43.22 per day which is 85 per cent of the annual single rate of the basic age pension.

Income-tested fee

A resident may be asked to pay an income-tested fee in addition to the basic daily fee.

The Department of Health and Ageing determines the fee each quarter, based on the person’s income information as obtained from Centrelink or the Department of Veterans Affairs.

Income as assessed by social security as well as social security benefits are counted when calculating the fee.

If you are a standard resident  & earn additional income over $31.31  per day you will pay  an income-tested fee until the maximum fee of $68.65 per day is reached.

3. Extra service fee

The facility  offered an extra service fee  instead of an accommodation charge which was $54.85 per day. The facility sets the fee, which must be approved by the Department of Health and Ageing and varies from one facility to another depending on the services being provided.

This enables residents to enjoy a significantly higher standard of ‘hotel-type’ extras in accommodation, food and services. Hence the 5 star *****.

If you aren’t aware of these daily fees  then you have an !! moment.

As the manager explained  & as occurred with our client ‘William’ recently the need for aged care  can be in a moment & often due to a stroke. Maybe it is a fall as Nan becomes  frail over time.

Often decisions are not made by the person entering aged care, but by family and others, and often under pressure.

If these charges are a problem then they all depend on income & asset testing under both Centrelink & aged care rules. The problem occurs if & when the house is sold & funds are deposited in the bank.

If Nan has  more income & assets then Nan reduces her pension & other benefits.  

Also to help all concerned please ensure your will & an Enduring Power of attorney is up to date & in fact done.

John McAuliffe

How may overseas trips will you have?

Yes we read of a recent survey of 1200 which outlined future goals of Australians.

Key findings included:

§  The top three items people didn’t want to give up were:

• Internet or mobile phone (62%)
• Domestic holidays (55%)
• International holidays (41%)
• §  Nearly half (48%) of over 65s had intended to be retired by now

§  §  Around half the people in the survey started planning for retirement before they reached 55 (49%) and a further 13% (each) said they started this process between 55-59 and 60-64.

We are at the age where we play tennis with ‘old fossils’.

 Each of them annually take an overseas trip of various lengths. This year they have had canal trips to Europe, cruises to Alaska, visited friends in Germany & in the USA or stayed in the South of France for two months. They all have cruised  & tripped around New Zealand.

Why can they afford to do so now? It is no secret that they have planned.  They have also saved for it.

 As David our IT man discussed yesterday ‘time is currency’ & making the use of the magic compound Interest & using appropriate ‘taxx havens’ means they have been ‘smart’ with their money.

Geraldine also yesterday discussed Napoleon’s four types of general & his preferred General  was the ‘Smart & lazy one’. I.e. they used their smarts & weren’t just ‘busy’ for the sake of it.

This week we saw a couple on ‘Hot Property’ selling their house. They at action achieved 80,000 less than their reserve on the house. That is a serious ‘wack’.

 One of my observations was the amount of stuff that they had in the house. Yes we certainly understand the need for some stuff but this was excessive &  when they do have the garage sales to assist their move the family wont collect what they paid for the stuff. We also comment that the RE agent could have suggested the Selling Houses Australia approach.

 He was either lazy or they didn’t listen.

 If they had put $10 per day aside into a not easily accessible portfolio then some of that 80,000 may have been there. It wouldn’t be cash or super. Their new house won’t be up to their existing home as they have LOST  80,000 of equity.

Let’s suppose we want [a word we don’t like but used in the above survey] to cycle around Oxford in three years time. It means we need

6000 for flights + 1000 p.w. for accommodation + 1000p.w. for sights seeing.

Say 12,000 in total or 4000p.a. or 333p.m. that is $10 per day.

That is doable & we must send this to our Young travel agent.

It is  less that smokers spend per day. Which would you prefer?  We ask.

The survey revealed that two thirds of Australians had not sought financial advice regarding retirement, and a third felt completely unprepared.

“While some see no need, or handle their own affairs, many actually consider financial advice to be too expensive or not trustworthy,”

How are they going then?

Lets answer the trust issue by meeting here for lunch first. Our clients for 29 years have made this first step. What else can we do to resolve this issue?

§  That might explain ‘Nearly half (48%) of over 65s had intended to be retired by now’.

§   §  And the survey  concluded

§  A main concern from the survey was that respondents were underestimating how much they would need for a comfortable retirement.

§  The average amount nominated for a comfortable retirement was well below the $56,236 ‘comfortable lifestyle’ for a couple and $41,090 budget for single people, estimated by the ASFA Retirement Standard in 2012.

§  Around 60% of respondents thought they needed less than $49,999, with 20% selecting ‘$30,000-$39,999’ and 17% choosing even less.

The survey also said

less than half had a good grasp of how much they had saved in super, and a quarter were “closing their eyes and hoping for the best”.

Hill said, “Despite the fact that many baby boomers are worried they won’t have enough money to fund their retirement and that they are not prepared, it is surprising that so few are starting the planning process early and seem to be in no rush to get any formal advice to help them on their journey.”

As Michael from Hot Property & The Castle famously says ‘They gotta be dreaming’

How much capital do you need to achieve that. Simply @ 5% you need a million.

If interest rates drop to say 4% you need 1.250,000 or you are  struggling on less.

As we pen this, the Red Queen is warning the Press Club that government entitlements will be less. Her reason is ‘labour values’ & dreams of education where we all have degrees & where after you ‘define the colour of your underwear ‘you might collect a nominal government subsidy to your needs.  The Red Queen has just said ‘bring it on’ September 12th.

Tony just replied ‘it’s all about trust’ . It is about not ‘paying more Taxx’  as that means you are paying someone else’s lifestyle. Why should you?

A reason why we are all cynical on super due to legislative RISK. All governments are socialist.

Many of us have been watching the Australian Open over the last two weeks & are in awe of the standards set.  We have also been hammered by the same advertisements.

·         One is that all these players have coaches & teams behind them.

 o   Andy recruited Ivan who has 9 grand slams & 90 ATP titles.  Ivan the coach had been coached by the master coach Tony.

     o   Queen Victoria collected 2.43m for winning & Li Na also recruited  a top coach.

·         Another is some fund which never mentioned its long term balanced performance.

Well we checked it & it is a flat line = 0.98% =less that 1% since inception.

 They didn’t advertise that. Look it up your self.

Flat lining is economic Death as it is below inflation.  

We also checked the Adviser service fee & as always what you need to know requires some perseverance.

This fee is automatically set at zero but can be negotiated between you and your adviser up to the following limits:

Initial advice: $4,659.10
Once-off advice: $2,329.55

This is deducted after you authorise payment to an eligible adviser for the advice you receive about your investment with the fund. They didn’t advertise that.

We are not joking as we are not Novak.

How many overseas trips do you want?

It won’t be what the big egos & boys charge even though we have been financial coaching for 29 years which is longer that they have.

We said to Paul who has known us for 15 years whilst coaching him our services are too cheap for what we offer him. He does & must trust us if he has his super elsewhere & spoke to a major bank adviser first & then agreed with our concept which had several new benefits.

Are you listening & as David said ‘time is currency’ .

Isn’t it time to call us today  on 07 3848 1088 or email us or contact us through our websites.

 John McAuliffe.

 

 

What does it mean with ‘Accident’ upside down?

 

We were asked that question on the school drop off run.

As Dads do we expanded on it & we hope they understood.

It means when you have an accident then your life is turned upside down.

You wonder if you will meet your bills.

You wonder if the mortgage will be paid.

You wonder if you have enough credit on your credit card.

You wonder what the hospital bill will be & how much extra costs will be.

You wonder if you will get back to work ever.

You wonder if your family can survive.

You wonder who can help you.

You wonder if you ever will recover & will the pain go away.

Can your family & friends help you. If they are like most they are only $1000 from trouble anyway.

 Hence the bill board from you friendly national solicitor soliciting for your custom. Some call it ambulance chasing.

Of course it included workplace as you have to blame someone & it must be your employer.

We have Chris &Liza who had an accident on the roads some years ago. It took eight years to finalise & then out of the 120,000 the solicitors charged or were paid first 30% or 36,000.

How do you survive those eight years in the meantime when you have two young daughters to bring up.

Denver  who had injuries whilst at work only had to pay 11% to his union solicitor. He only took two plus years & was awarded 140,000 due to loss of earning & pain & suffering over that time.

Do you want your world turned upside down?

Of course the solicitors only chase accidents.

 

What if you have a stroke as many do?

We have Joseph who had such 4 years ago & is unable to work even now. A stroke is not an accident & the mortgage & meals & bills need to be paid. Joseph has been helped by his workplace sick leave, his salary continuance on his super but only for two years & a small 66,000 Total & Permanent lump sum pay out. Even that is not enough as life goes on.

We have had recent enquires from two women around 40 each with cancer 2 years ago. The first has debts of 1.5million & two young boys. Unfortunately she has had a reoccurrence of the cancer in spite of radiation & chemo treatments.

The most recent case is a lady who ‘I unfortunately went through breast cancer in 2011’ with a large 400,000 mortgage & three youngsters 6,9, 10 to bring up. She tells us her employer, ‘the government do not include income protection insurance’.

 

Unfortunately these stories happen to individuals & families every day.

If you don’t want you world turn upside down then there is an alternative.

Yep ,you could chase the TV advertisers & yes you might get life insurance.

However what you need if you survive are your debts paid off & your income to continue to help meet your commitments.  You cost more when you survive.

You want it faster than the courts & the solicitors offer as they play a long game.

It is a researched fact that you recover quicker from accident or cancer or stroke or other traumas if you have fewer worries & fewer debts & bills are manageable.

Many say it won’t happen to me’ & we trust they are right.

As we read yesterday ‘insurance is like a seatbelt, you put it on & hope you never need it.’

Our Young travel agent says ‘if you can’t afford the insurance you can’t afford the trip.’

As we say ’insurance is like jocks & socks [or lingerie] as you put it on first’.

                Or ‘a good financial plan protects the downside’.

If you believe that you can access your super then there are impossible conditions before you can.

 If you believe the government will help you then as Hilda said ‘ they want to know the colour of my underwear.’

It is your choice but don’t say we haven’t suggested it to you. You can check out estimates on our free estimator but they are your numbers & not necessarily what we would advise.

A better solution is to meet over lunch here & ‘do it right’ & within your budget.

You are welcome to call us on 07 3848 1088  or email or via our websites.

 

John McAuliffe

 

Does Nan sell the house?

Yes this is the question we all face when Nan has reached the age & she admits that an aged care facility is really where she needs to be. 

If Nan is assessed by ACAT as ‘low care’ or high care with extra services’ then an accommodation bond will need to be paid.

Recall that the accommodation bond depends on the facility & is charged if Nan has assets over 41,500 currently. It can be a large say 350K on average but we recently attended a talk by the Minister who mentioned a bond of 2.1m.

If Nan moves to a hostel or nursing home the decision to sell or keep Nan’s home can affect how much age pension Nan receive as well as the daily care fees Nan will pay. Overall this impacts Nan’s total net income.

How can the bond be funded when it is sizable say 400k on average & Nan doesn’t have the funds.

Recall that a facility doesn’t have to take Nan as any agreement is mutual. You may find a facility to place Nan is not easy to find.

 Also recall that the house counts as an asset under aged care assessment  and hence the accommodation bond [or charge if high care]. [We will assume that Pop has passed on.]

 

1.       If Nan sells her home, the money Nan receives will be assessed depending on how it is used.

If Nan sells the house & has money left over after the accommodation bond is paid  then as Nan like most is on some part pension then her pension may be affected as she may be earning more than in the past.

If Nan as usually the case places the surplus funds  into cash at the bank then these will have deemed rates of return.  Nan’s pension income reduces if she earns more than 152p.f. or she has assets over 332K as a non home owner. This adds up if as on average Nan ticks on for 5 years.

 

How does Nan pay the accommodation bond?

The accommodation bond can be paid as: a lump sum or periodic payments¹ or a combination of the two.

A facility can deduct a retention amount on a monthly basis of up to a maximum of $3,876 p.a. for up to five years (depending upon the amount of the bond shown in the following table). The retention amount does not alter during the five-year period.

Bond amount	Maximum annual retention amount
Less than $20,040	$2,004 per annum
Between $38,760 and $20,040	The maximum is calculated by multiplying the bond by 10 per cent
$38,760 or above	$3,876 per annum

The Remaining bond must be refunded within 14 days if a resident passes away or leaves the accommodation.

If transferred to another care facility, the bond may be transferred and the resident should not have to pay an additional bond in a low care facility (such as a hostel) or an accommodation charge for a high care facility (such as a nursing home).

 ¹ If the periodic payment method is chosen, a facility can charge a maximum interest rate of 7.24 per cent effective from 1 January 2013 to 19 March 2013. The interest rate is fixed upon the date of entry into the aged care facility.

2.       In many cases the family or Nan want to keep the house & pass it onto the family. They forget that in many cases the family have their own home & mortgage & that selling the house after Nan passes on is what will happen.  As often said ‘where there is a will there is a relative’& any lump sum is appreciated for the mortgage or the school fees or hot air ballooning.

 If Nan keeps the house then Nan must meet 2 of these 3 parameters.

·         Not pay the bond in full & Nan must pay interest on the outstanding amount by periodic payments

·         Pay an accommodation charge which is if Nan is in High care.

·         Rent out the former home.

This option has Centrelink exemptions such as rent & asset test but will be assessable by ATO.

Lets also not forget that house maintenance is 1%to 2% of house value p.a. & net income returns are often bettered elsewhere.

For Nan & the family this is an emotional time & we must not forget that Nan is the client. Hence what is best for her must be the overriding consideration.

As we explained an accommodation bond  to Les, a not so retiring retired accountant he immediately concluded  ‘so the bond doesn’t count as an asset’. [For Centrelink purposes.]

Exactly Les.

This is one reason why a resident paid $2.1m for a bond last year.

 It is a reason why the government is bringing in rule changes from July 2014 under the banner

Living Longer. Living Better. It includes limiting the size of bonds & as often the case what is good for them is not good for you.

 As can be seen Nan has both Centrelink & aged care assessments & they are very different. We haven’t brought in the daily charges  & other charges that are charged daily as that is for next time.

It is only government with brigades of employees who could make this decision for Nan to sell so complicated. You can read all @ Department of health & Aging.

 

John McAuliffe

How to earn $ 163,000 in one week?

How to earn $ 163,000 in one week?

Yes, we cycled across to the tennis last week & that was what Serena earned for the Brisbane International tennis. Not a bad week’s income considering that she didn’t have to play the world Number 1 ‘Queen Victoria’ who forfeited the match due to pedicure misadventure.

Yes a good week’s ‘Gross’ income [it is a business & businesses have costs] & how did she get to that income & standard.

Let’s not forget the taxx she has to pay & as Peter reminded us this week

The two enemies of the people are criminals and
government, so let us tie the second down with the
chains of the Constitution so the second will not
become the legalized version of the first.
                             --  Thomas Jefferson  --

We also read of Gerard who has moved from France to Russia. He reckons he has paid 148M in taxx & now has decided to be unpatriotic. It appears Russia is less Socialist.

We probably have all seen her Dad Richard sitting in the stands[most recently away from Mum]. We have heard how her & Venus learnt to play in gangland LA with Richard doing what Dads & coaches do to motivate & encourage & assist their daughters & charges to progress in their sport or trade or vocation.

We recall Martina with her Mum, Steffi with her father & Maria with her father all achieving great incomes through guidance & hours of coaching.

Yes all the girls & all the players have coaches to help them move higher up the ratings & with that means higher incomes.

We saw a TV flash with Serena practicing simple repetitive back cross court shots with her current coach. There is continual work to maintain & improve.

The WTA also allow the girls to request their coaches for advice during play. We know that all helps as ‘in the trenches’ all you see is ‘the fog of war’. You need help & a view from afar.

As the girls health is so important then they have a major sponsor which you might note on the bill boards the maker of the Number 1 supplements on the planet. As Gerald, a radiologist, said to us 10 years ago “if everyone was on these then he would be out of a job’.

Then on Sunday we over heard a certain cricketer ‘having it easy’. We will bet & he likes to do so that he practiced for hours during his teens & playing days & teams these days have coaches for every facet. Why did Australia do well bowling last year again the English. P. Siddle with a hat trick. They had a coach Craig who has been there & done that.

We observe that currently many of the cricket test teams have South African coaches which makes sense when RSA is no 1.

The same with finances. We had friends over & he said that he couldn’t control his wife’s spending.  That is really simple, ‘give her a monthly budget & a limit on the credit card’ & its ‘sausages or steak’ depending on the time of the month. Ideally cut up the card.

That is what the USA needs to do when 47% are on government support & 16 trillion in debt. It is in fact the debt that is summarised by a recent email to us that may bankrupt the US although some Rep. Rep said this week we won’t default. Yeah right.

The minting of a trillion dollar coin & depositing with the Federal Reserve is one way suggested.

Are you serious? The USA could use Al Gore’s help & wealth. Maybe too many drones in the sky.

 However the USA is uncoachable & we only help those who are coachable & have control of their debts.

As we discussed with William on Wednesday ‘debt is like tattoos & weight, easy to get but hard to remove .

[ William had just returned from a cruise & he was appalled at the gross weight of passengers &  others with too many tatts].  Winners achieve through self discipline & there is ‘no free lunch’. Our contempories at the tennis weren’t obese & we suspect could generally play tennis to a standard.

Joe a builder, was here recently & his contemplating moving to self employment as with Mr. Cricket he has tired of being away from home & family. There are steps to make as he makes this move.  He should of course write a business plan as all buildings need a plan drawn up by a draughtsman or an architect.

All  buildings should have some Foundations & insurance & hence we used our free calculator to estimate the deductible premiums with Joe.

Our credit union headlined ‘Who paid out $3.9 billion in 2011 & it wasn’t the lotteries?’

Yep an average of $15.9 million was paid to 251 Australians every working day for life insurance claims.

 As Victoria found, missing ‘work’ through injury might mean a large drop in income [163K]& meals & mortgages & leases & costs still need to be paid.

Joe is also aware that he needs a business vehicle & using his own cash isn’t ideal as trucks depreciate & his own cash would be better off paying down his 250K mortgage. Will Joe have that debt paid off before he retires & unless he actions the above idea then it won’t happen.

We could bet on that given our observations over 28 years. Joe needs a financial coach or builder as he needs to have no debt & 1 million in the bank or his business to enjoy his grandchildren. We do have actionable ideas for Joe.

Joe has a family & needs much more cover than is the union fund provides & we have found their clauses to be interesting.

We loaned Elizabeth ‘Rich Dad Poor Dad’ to understand that homes are not assets as they don’t provide an income. We suggested to her not to sell her rental properties due to the high costs 20K Elizabeth has already paid & a similar amount if she was to sell. Rather pay down the debt so she has income from it when she retires in 16 years.  

We also remodeled her superannuation  at a lower cost with more options including direct shares.

‘Invest like a cockroach’ if your wealth is to survive.

We might observe that generally it is Dads & their expectations & advice that helped Serena & others to have  higher incomes & no debts. Mums usually suggest buy a house & settle down.

Where would that get the WTA girls?

 “correct us  if we are wrong”. Whoooops ‘tiger Mums”

If you wish then you are welcome to call on 3848 1088 or email or visit our websites to plan & financially progress over 2013. Unless things change then nothing changes.

Maybe check out this chart. Maybe we can save you 15% in taxx. Lets do.

How much will the Aussies, Atomic Bernard, Sam, John Millman & others win in Melbourne?

John McAuliffe