How much do you think it costs to spend a year in a old age home? Or worse in frail care? You probably assume it’s less than R100,000. Not so. The actual national average is around R120,000 to R150,000 a year – and that’s if you’re living conservatively.
That’s pretty expensive when you consider that a year at a private school will set you back between R35,000 and R60,000 (including full boarding). Or when you think that a luxury cruise will only cost you in the region of R75,000 for two. And while most of us hope never to need to go into a home, older people often have to make a major life decision at very short notice following a crisis, like a bad fall or an extended stay in hospital.
To avoid being caught out unaware in later life, you must do your research, understand the process and figure out ways to reduce the financial burden before a crisis occurs. And that’s why this week, we’re helping you do exactly that.
Tip #1: Use rental income to fund your care
If you haven’t planned for the eventuality that you may end up in a frail care facility, you only have two real options when it comes to paying for care. You can either sell your home and use the money to pay for your care fees, or you can pay the fees from any investment income you may have (and rent your home to help with costs).
Making arrangements to ensure you’ll be able to afford frail care ranks right up there with regularly updating your will – it’s not something people relish doing. But it’s something you need to think about. According to Berry Everitt, MD of Chas Everritt property group, “places in old age homes – especially those with frail care facilities – are scarce and waiting lists are usually long”. And that means when there s an opening, they usually come with relatively high costs – and that’s a big problem for retirees living on a fixed income.
What can you do to avoid this? One great option is to get onto that waiting list right away – and then rent your retirement spot out while you age – gracefully. This way, you’ll pay off the property during your working years, plus earn extra income renting it out.
Start your 3 week risk-free trial today.
Tip #2: Don’t make assumptions about the level of care you’ll need
One of the first things you need to check is what level of care is available at the retirement village you’re interested in, cautions personal finance team Neesa Moodley-Isaacs and Laura du Preez. “Even if a frail care facility is available, this may not mean you can be treated for all medical conditions.” You also need to check whether the retirement village has a 24-hour emergency service. You’ll need this should you or your partner fall, suffer a stroke or have any other kind of medical emergency.
To find the best home for you, you need to understand the differences (and costs) between your various options:
• Preventative care: Many retirement villages only provide preventative care. This includes basic health monitoring – like checking your blood pressure and cholesterol – as well as medical advice. This cost is usually part of your monthly levy.
• Home-based care: This is the type of care you’ll need if you or your loved one requires assistance with daily activities – like bathing and dressing. In most establishments, these activities are performed by a nurse supervised caregiver. Depending on the establishment, this may or may not be included in your monthly levy.
• Frail care: This is what a person who requires a lot of nursing, as well as help with dressing and washing, etc. needs. This includes care for patients who are either physically frail or have mental problems like dementia or Alzheimer’s. Depending on the level of care you need, this could cost you between R7,000 and R12,000 extra each month.
• Private nurse: If you decide to “go it alone” and hire a private nurse to visit you at home instead of going into a retirement village, this will cost you upwards of R125 per hour. A roundthe- clock caregiver could set you back R15,000 a month or more.
Tip #3: Ensure you know about rate increases
With frail care costing upwards of R7,000 a month depending on the facility, make sure you enquire about annual rate increases before you sign up, says Jim O’Donnell. According to him, the three most important questions to ask about rates are: How often and under what conditions do they occur? If there’s a cap on monthly rate increases? And are full fees charged if a resident is hospitalised for an extended period or are they prorated? Make sure you’re fully aware of the increases, so you can budget accordingly.
For the latest advice on the best strategies for investing, just sign up for your 3 week risk-free trial now.
