Like all major investments, how to pay for your preferred residential accommodation facility will be one of the biggest financial decisions of your life.
If you have done your research you’ll know the two main ways to pay for your preferred facility is through a Residential Accommodation Deposit (RAD) or a Daily Accommodation Payment (DAP).
But which is the best option for you?
Affinity Aged Care Senior Adviser Robert Craven said the right payment option entirely depended on the individual.
“There are so many things to consider when you decide how best to pay for residential care, and as one of the biggest investments of your life it is so important to factor in all your personal circumstances,” Robert said.
Robert said for many, the decision on how to pay for the facility came down to the question of what to do with the family home.
“If you decide to sell the family home, you may automatically think that paying by RAD is your best option, but it is important to remember there may be an interim period where limited funds are available.
“In this situation, you may need to pay by DAP pending the sale.”
Robert said that if the home was retained and a significant proportion of the accommodation cost was to be paid by DAP, a monthly drawdown from the equity in the home may be possible to fund any shortfall.
“In some cases you may prefer to pay a RAD to secure the facility of your choice and you may have liquid assets to fund this without selling the home.
“In other circumstances may make sense to use a reverse mortgage, or consider if you should pay a DAP can be partially deducted from a partially-paid RAD.”
Robert said the complexity of these decisions meant it was absolutely crucial to obtain financial advice before making a decision about the best method of paying for an aged care facility.
“Many financial advisers only have a basic understanding of aged care, so it is crucial to speak to an adviser who specialises in the field and has the in-depth knowledge to explain all your options and give you the confidence to make the move into an aged care facility.”