Retirement Living and Aged Care Planning with Rachel Lane [Ep74]

Welcome to episode 74 of The Innovating Advice Show.

I’m joined by Rachel Lane who is the Principal at Aged Care Gurus in Australia which helps professionals up-skill and provide quality aged care advice to your clients.

With the coronavirus pandemic most strongly affecting our older generations and bad press around the world from outbreaks in aged care facilities I invited Rachel on to get a better understanding of aged care, how much of the news represents reality and when and how advisers should be having aged care discussions with their clients.

Rachel also shares the designation they’ve created, The Retirement Living and Aged Care Specialist, To highlight how specialized of an area of advice and planning this is.

And to further help advisers with this complex topic, she’s also developed a powerful software solution. That’s part 2 of this podcast and you can find the short demo webinar below.


Guest Bio

Rachel Lane is Australia’s aged care guru. Her engaging explanations of the ins and outs of financing retirement living and aged care are embraced by thousands of readers of the Sydney Morning Herald, Melbourne’s Age, and the Brisbane Times and she frequently speaks on radio and television.

She has co-authored a number of books including the best-seller Aged Care, Who Cares? with finance expert Noel Whittaker who she has again teamed up with recently to write “Downsizing Made Simple”.

Rachel has specialised in retirement living and aged care for more than 15 years and holds a Masters in Financial Planning which included a thesis on the financial drivers of consumers and operators in aged care.


02:17 - Introducing Rachel Lane

03:47 - What is aged care?

05:52 - The different options available

09:57 - Home care vs Aged care

11:02 - Consumer-directed care

12:02 - The impact of the pandemic on aged care

14:23 - Overcoming the resistance to moving to an aged care facility

15:52 - Is the aged care facility industry tarnished?

17:10 - Helping people understand all options

19:24 - Respite Care Australia: try before you buy

22:10 - When to have the conversation: the earlier the better

25:01 - Who should be involved in the conversation

28:21 - RLACS designation

33:30 - Embrace the complexity and get advice

35:00 - Some final thoughts: get empowered and take control


Kate: Hello, Rachel, welcome to the show.

Rachel: Hi.

Kate: So we are talking all about aged care. So let's start with what is aged care?

Rachel: Aged care is different things to different people. I think when you use the word aged care, a lot of people have kind of images of nursing homes conjure up in their minds. And that's a bit of a misnomer. You know, this whole idea that everybody who needs aged care receives aged care in a residential aged care facility. It's simply not true. Less than 20% of people who receive aged care services in Australia receive that as a permanent resident of a residential aged care facility. So I think that misnomer, kind of that myth and how much people believe in that myth, is really what stops people from discussing their aged care options. Because let's face it, if you think that opening up that conversation is a slippery slope to a nursing home, you're probably not going to say, Hey, let's chat about what happens if I need aged care. So, you know, there's a whole education piece that needs to happen both for advisors, but then, advisors with their clients about what does aged care mean and how aged care can and does mean different things to different people. And it's not a slippery slope to a nursing home.

Kate: Well, and I might even add a third one on that in terms of conversations with advisors and their own family. And that's one of the reasons you and I chatted a few months ago, and we're looking at the timing of this episode and knowing how big of a discussion has been happening around aged care. And it has not gotten a great reputation in the media. I mean, I'm here in the US, I'm from Seattle and the whole COVID outbreak started in a nursing home half an hour from where I grew up. And then it kind of kept exploding from there. And there has just been all this concern. And I do think thinking back, they have been saying nursing homes, I'll have to look at that and see what the terminology has been in the media, but certainly not helping some of the misconceptions that I'm sure are out there.

Kate: So let's get some of that terminology out of the way, because there's a lot of it. And I don't even think I was familiar with all of it. So in terms of, you know, aged care versus downsizing. 

Rachel: Yeah. And sometimes those things are a hybrid, and where we see the greatest growth, if you like, in terms of accommodation and services is really in that, retirement village, Landlease community type model where people have the independence, they have the privacy and the dignity of their own space. They can close the door and know that somebody else doesn't just  walk through that door  at any time of the day or night. So, they're becoming a much more popular model, but then with, and sometimes they call them concierge services or something with a little bit fancy so that it's not necessarily kind of, care based. It's more enablement based. And they get this kind of a hybrid model where they've got independence, and the ability to do what they want to do and what they can do for themselves.

Rachel: But then there's this underlying level of support, whether that's care or whether it's things like meal preparation or perhaps meals in a centralized dining room. Whether it's activities, whether it's transport to and from appointments or social gatherings, there's a whole bunch of services that can kind of get delivered in that environment very, very efficiently that enable that person to maintain that level of independence.

Rachel: And I think, what we've heard from our aged care Royal Commission so far is that that really needs to be the focus of our aged care system. It really needs to be focused on the individual. And what does the individual want? What are their goals and how do we create a system that is all about enablement, for whatever it is that they want to do.

Kate: Yes. Yeah. And then you've got granny flats.

Rachel: Yeah. So I guess  when someone says to me aged care, I think, well, that could mean a spectrum of things. That could mean staying in the family home that you've always lived in. It could be moving in with your kids or your kids moving in with you and creating - whether you know it or not - a granny flat arrangement as Centrelink call it. It could be downsizing into a retirement village. It could be downsizing into a Landlease community. It could be moving into a co-housing arrangement. So we're seeing more and more of those pop-up where lifetime friends build six houses together around a central courtyard and what could go wrong...

Kate: Like a little commune.

Rachel: Yeah, yeah, that's right. In the old days. When I was a child they called that a hippie commune.

Kate: Yes, we did too!

Rachel: So, you know, as well as residential aged care and residential aged care  is transforming. I don't think that aged care has changed in terms of the options that people have. I just think what we're seeing is, what the government call an aging population. So we're just seeing more people going into those arrangements, more people going into granny flats, more people going into retirement villages, more people going into Landlease communities.

Rachel: And we see that with our home care package waiting list as well. You know, quite sadly, there's more than a hundred thousand people waiting for a home care package at the moment in Australia, which is actually more than the number of people who are receiving a home care package. So I mean, the system  is very, very broken, but if we look at it from that point of view, you know, the demand, and that's also demand where a lot of people don't even know that home care packages exist. So once there's that level of education that goes through, you would expect to see demand for those packages increase even on what they are at the moment.

Kate: So what's the difference between home care and aged care?

Rachel: Home care is just one of the programs that fall under the umbrella of Commonwealth funded aged care.

Kate: Okay.

Rachel: And there's kind of two distinct programs within that. Broadly speaking, there's the Commonwealth Home Support Program, which is really  the entry level program. And a lot of people would be familiar with Meals On Wheels. Meals On Wheels exist within what they abbreviate to CHSP, Commonwealth Home Support Program. Within CHSP you can't  allocate a budget of money. Essentially, they assess your care needs, and they say, we can give you these services each week  and you accept or don't accept those services. And they pretty much decide who your provider is going to be. And a lot of time you won't necessarily have full control over what day of the week or what time of the day those services get delivered to you because they're trying to roster staff.

Rachel: With home care packages, it's a completely different dynamic. So it's what they call consumer directed care. So the consumer has a budget of money, that they have a host. So they have to nominate their home care package provider to host that package of funds. And then they choose both which services they receive. So what do they use that home care package to pay for, but also who delivers those care and services to them.

Rachel: They can also use those home care package funds for home modifications, appliances, mobility aides, things of that nature. So it's not necessarily, a lot of people think that it's sort of weekly or monthly drip feed of money that you then need to spend every week or every month. No, a lot of people save up money in their home care package so that they can buy a mobility scooter or modify their bathroom. It's much safer for them to use things of that nature as well as the ongoing care element.

Kate: Sure. And circling back and thinking, cause we're in 2020, thank goodness it's almost over. But again, all the media attention around whether it's nursing homes, aged care, home care, whatever you want to call it. I think we're seeing it all around the world. How has that shifted the conversation around planning for aged care? Are you seeing any impact from this pandemic?

Rachel: Absolutely. We're seeing so many people reevaluate their living arrangements. They're looking at their home I guess because they've been stuck inside their home. I know for us, I'm in Melbourne and we've probably been the worst effected over here. So we've been stuck at home for the best part of seven months. And you do, you start thinking, Oh my goodness, that that needs to be painted or that needs to be repaired or that needs to be replaced. And if you don't necessarily have the ability to do that, whether it's a physical ability or a financial ability, I can see why people are really reevaluating their living arrangements and going well, do we really need this big house when we're empty-nesters or is this, a lot of people when you start talking to them about aged care, they say, you know, well, when I need aged care, I'm going to get mine home delivered, you know, like, like Uber eats or something, and they don't really stop to look at their home and think about what are the practicalities of that?

Rachel: How many stairs do you have? How wide are your doorways? Are you going to be able to get a walking frame or a wheelchair through those doorways? How are you going to be able to navigate your kitchen, your bathroom? How are you going to be able to get outside? Typically to leave a home there are steps. So there's all of that.

Rachel: I think for people who are currently considering aged care, I think that particularly in Melbourne, there's a big resistance to moving into residential aged care. And so we're certainly seeing from an advice point of view, a lot of people looking at alternative options, like living with family, granny flat arrangements, I would say are booming from what we can see, the number of advisors using our software to model a granny flat arrangement is at record highs. 

Kate: So what's causing that resistance to moving into an aged care facility?

Rachel: So we've had the highest number of deaths from COVID in residential aged care, but then I think you've also got this aged care Royal Commission that's happening at the same time. And you can imagine that there's horror stories that are coming out of that about, you know, neglect and abuse and malnutrition and, you know, really, really sad stories. And I think people are just saying, well, what else is there? I think a lot of people have always assumed that that's the choice that they would make, would be residential aged care.

Rachel: And now they're looking at that and saying, well, I don't think I'm that confident that mum or dad or both is going to get the care that they deserve and need. What other option is there? And I guess it's quite natural for a lot of families to then kind of turn inward and say, well, why don't we get mum or dad or both to come and live with us and we'll do it. You know, we'll provide the care and support that they need. And traditionally that's how aged care worked and in a lot of other countries that is how aged care works.

Rachel: You know, they have fancy names for it now, Kate, you know, they call it intergenerational living. When I was growing up with my grandma, it was just called growing up with your grandma.

Kate: So is it a fair assumption or perspective that living in those aged care facilities is not as safe and I don't know that I want to say wonderful, but isn't as good as it once was thought?

Rachel: I think what's being shown is the underbelly. I don't think what's being shown is, if you like, par for the course. I think there are some fantastic aged care providers out there who are going to have a really tough battle  to show that they don't resemble anything like these stories. And that's pretty unfair really because they potentially have never done anything wrong, never done anything to deserve any suspicion. And yet now   these horror stories of basically tarnishing the whole industry.

Rachel: So, but I guess in a way, if there is any silver lining, it is that people have been having that conversation. Unfortunately, sometimes the conversation starts with, you know, don't put me in a nursing home, whatever you do, don't, you know, I don't want to move into an aged care facility, but at least that's a starting point.

Rachel: And  that was really my motivation for writing the book with Noel, "Aged Care, Who Cares," was really about helping people understand all of the options that, this is not a single meal. This is a smorgasbord and you need to work out, based on what suits you, the lifestyle that you want to have.

Rachel: I hear lots of people say to me, there is no way I'm going to live with my family. You know, I love them and I love going to visit them on the weekends or for Christmas or whatever, but I don't need to see them 365 days a year. Thanks anyway. So those people then sort of, they're typically the ones that then move into a downsize type option. An apartment, a unit, a smaller home, those sorts of things. But when they're doing that, and I guess where we're dealing with much savvier buyers now, we're dealing with the start of the baby boomer generation. They're asking questions about care, even when they don't need care today, they're asking the question because they don't want to make that move. They kind of look at the downsizing option as almost like a preemptive strike against ever having to move into residential aged care. So they want to make sure that the infrastructure's there, even if you can't see it, the infrastructure's there in the building and it's there in the services that, should they need it, those things can be added in and they don't have to then move somewhere else.

Kate: Well, and I want to know, and I mean, in terms of thinking of the negative public perception now of aged care facilities, that's something advisors are all too familiar with is you get all these bad apples. And especially in Australia with the Royal Commission, and then just having this broad stroke painted of all advisors are bad. So, advisors can relate to that. And so we need to make sure that we're being as kind to others as we would like them to be to us and know, Hey, not all aged care facilities are bad. There are a lot of good ones out there. And I think we all know and understand the media certainly can make things a bit more, dramatic than is the full true story.

Rachel: Sure, and I guess one of the things that we have, a lot of people who are assessed as being eligible for aged care services are eligible for up to 63 days a year of respite in an aged care facility, which respite is designed to give carers a break. And it's a very important service, but it's also a fantastic way to try before you buy. If you have a respite stay in an aged care facility, it's going to cost you about $52 a day. They don't charge you for accommodation. They don't charge you means tested fees. You get all of your care, all of your meals. And I can assure you by the end of a two or three week stay, you'll know exactly how that aged care facility operates. You'll know what are the activities. What's the food like, what are the staff like. Do you like it.

Rachel: You know, is this the place for you. And given that you get 63 days a year, if it isn't the place for you, then you've still got the opportunity to have another respite stay somewhere else. And another respite stay somewhere else until you find, cause to me it's like choosing a home. Don't just choose -

Kate: Absolutely.

Rachel: It's not driven by location. You know, like that's part of it, but there's so many other elements to it. And a big part of the, I guess  the decision is completely intangible, right. It's the vibe. So you walk into some aged care facilities and they feel like a luxury resort. You know, now, if that makes you feel intimidated, if that doesn't feel cozy and warm and homely to you, it doesn't matter that it's gorgeous. It doesn't matter that it's got gold taps.

Rachel: It doesn't matter that it's got fireplaces and all of that. If that's not your schtick. So you've got to find that. It's the same with choosing a retirement village, choosing a Landlease community. It's exactly the same.

Rachel: I think sometimes people think that choosing a nursing home is just about finding one in the right location. And there's just so much more to it than that. And what actually happens day to day becomes so important because typically people, once they move into an aged care facility, they lose those other connections. Like they don't go outside as often as in outside of that community and engage in those other social networks. So what happens within that community in terms of activities and the other residents and the staff actually has an even greater weighting on whether or not you like it. And the only way to work that out is to give it a go.

Kate: I didn't actually know that was an option. That's amazing.

Rachel: Yeah. And it's super affordable. So from a financial planning perspective, it ticks all the boxes.

Kate: That's awesome. And you mentioned kind of when to have that conversation or do you have it earlier. So let's dive into that a little bit because when should these conversations ideally be taking place?

Rachel: Yeah, unfortunately most of these conversations are taking place in a hospital car park. So people see the deterioration and they see the need, but they either feel like it might embarrass their loved one  to bring it up or they know from what that person has said in the past that  it's a touchy subject. But really the earlier you can bring it up the better. And the reason for that is because the sooner you start thinking about it and the sooner you start planning for it, the more choices you've got.

Rachel: Typically people leave it until they're in that hospital car parks scenario. There's been some sort of medical crisis, a fall, an episode of some description and the hospital just turn around to the powers of attorney and say, look, mum or dad, whoever it is, can't go home. But they don't need to stay here because they don't need hospital care anymore. So in the next 48 hours, you need to find at least five options because the first one of those options that becomes available, that's where they'll, they'll move to. And it's just dealt with in an absolute pressure cooker scenario. And you can imagine the choices that are available to you are the choices that are available, that you can identify in a 48 hour period.

Kate: While you're emotionally distraught.

Rachel: Correct. Exactly. So it's not, doing it that way, while most people do do it that way, doing it that way, it just is not designed to get the best outcome. So the best outcome is, is typically achieved by having those conversations in advance, by trying before you buy, when it comes to home care, a lot of people resist home care because they think  if I have the aged care assessment and I'm approved, somebody is going to come on Monday and start delivering care and I'm not ready, you know, psychologically, I'm not ready for that to happen.

Rachel: In reality,  the wait for a home care package with all home care packages, except the lowest level is more than 12 months. So when I'm talking to people about this I say, yeah, but are you ready in 12 months time? Like, is that enough time to think about it and decide what you would like and who you would like your home care package, because you've got a lot of time. So, you know, just because the ball starts rolling today, doesn't mean the ball's going to roll quickly.

Kate: Yeah. And who should be involved in those conversations. Cause those are, those are tough sensitive conversations. I mean, how does the advisor initiate it? Should the advisor make sure that kids are involved as well so that that conversation is a bit more out in the open?

Rachel: Look. I think that's a very personal thing. A lot of people say, Oh, you know, you have to involve the kids, but I sort of say, well, but why, you know, the last time I checked inheritance was a gift and not a right.

Kate: Yes.

Rachel: And sometimes the, the people with the greatest conflict of interest in that transaction can be the children who may be quite resistant to a downsizing option, like a retirement village, for example,  where exit fees typically do exist. So, I don't think it's necessarily that they must have children as part of that. I definitely think it's a good idea to have clearly stated what you want, so that people know so that it's not, it's not a mystery to anybody that if somebody needs to make those decisions for you, you've got the relevant power of attorney documents and guardianship and all of those things.

Rachel: You've got all those ducks in a row, and they know what to do, but I don't think you necessarily need to need to engage children unless you want to. A lot of people engage their children to help them sort of work out what the options are. And even to a certain extent crunch some of the numbers, which is often how seniors end up in front of a financial advisor, because the kids look at the numbers and go, Oh, this is very, very different to anything I've ever seen. Let's take you to my financial advisor and get some really good advice about this because, you know, mum or dad, or both are probably getting an age pension, which is something that the kids don't get. There's means tested fees, which are complicated to work out. And then of course you've got exit fees and exit fees in retirement villages and Landlease communities in particular can be very complicated. And the most complex arrangements of all, while most people would say it's residential aged care, it's actually granny flats. Granny funds can be really, really tough.

Kate: And that's where I was thinking where you probably should have the kids involved. If it's going to be a granny flat, Hey, guess what children I'm moving in with you.

Rachel: Surprise. Yeah, that's right. And that can really create, some tough dynamics, especially where there's more than one child. Obviously the parent or parents are going to live with one, and the perception of the other siblings is typically, well hang on a moment,  there's a big wealth transfer going on here that means that the future estate planning is now not necessarily fair to me or to my brother or sister. So, that can certainly cause a lot of, a lot of ructions in families.

Kate: Yeah. So Rachel, you're really highlighting how much goes into all this. You're explaining things I've never heard of. I've done a demo of your software, which we'll chat about in a second. And there's a lot of things I honestly don't understand in there. Some of it's specific to Australia, but it's emphasizing that this really is a truly specialized area of advice. And so you have developed a RLACS designation, not relics, RLACS, the Retirement Living And Aged Care Specialists. So talk us through what that looks like.

Rachel: So  it's actually RLACS. It's RLACS, which stands for Retirement Living And Aged Care Specialist. And we've developed that, so it's a standalone course. And actually you can do any one of the individual components of the course. You don't need to do all of it. Those components include residential aged care, granny flat and life interest arrangements, retirement villages and Landlease communities, as well as home care. And some people do all of them. Some people just do some of them and build on it over time. But really what we wanted to recognize is exactly, as you say, just how specialist of an advice offering those advisors have, how much they understand. Because I think for me, if I was going to seek advice from someone about my aged care options, and the only option that they had education training and support on was residential aged care, I'd want to know that.

Rachel: I'd want to know that that's the constraint. And so we developed the designation to make it clear that that these advisors can give great advice across the spectrum of all the options that are available to you and not just support you if you happen to be choosing residential aged care, which we know that the majority of people don't, that's not their first choice.

Rachel: So, we offer that also as a subject in the masters of financial planning with the University Of Technology in Sydney. So people have a number of different ways that they can access that course. And then we support those advisors ongoing. So  we have the software which you've taken a tour of. We have lots of fact sheets, advice documents  that the advisors can use, PowerPoint presentations, seminar invitations. There there's a whole library. We actually have three libraries. We break our materials down into three different libraries, depending on whether they want kind of marketing material, whether they need advice type documents, or whether they're looking for technical type support. So the advisors get access to all of those libraries and documents to help them, basically give great advice.

Kate: And knowing all the complexities between countries. I mean, a lot of similarities, certainly. I mean, you mentioned earlier culturally, sometimes it can just be granny flats are naturally the way to go when you have your parents move in with you. Other places, that's maybe not the first choice or what everyone will go to. So between your, the specialist designation and the software, do you have plans in the future to expand into other countries?

Rachel: Not at this stage, I guess because the pension implications, the means testing arrangements, the way in which all of those things are calculated is quite unique to Australia. Even New Zealand is quite similar to Australia in a lot of ways, and even bear system is distinctly different from ours. So  at this stage no, it's an Australia specific product and service offering.

Rachel: But you know, I would say watch this space, particularly with  the amount of expertise that's currently being exported to China around retirement living. They're really getting into the retirement living in aged care space. And I know that they're looking quite closely at what we do in Australia and how we do it. interestingly, I think that if we did become an export to another country it might be China because they're relying on so many Aussies to build their retirement living in aged care over there.

Kate: Yeah. Well, you'd be great for that. And like we mentioned, the software, we've got a demo of that. So that's part two of this podcast and it was just really eyeopening. So even for people that are outside of Australia, I encourage you to watch it. It's short and sweet, and it just opens your mind if nothing else about the fact that this really is a specialist area. And if it's not an area where you are an expert to find someone who is so within Australia, someone who has the Retirement Living And Aged Care Specialist designation, you know, maybe that'll expand over the years, but just knowing whether it's for you and your family or for your clients that there's so much more going into this than all admit I ever realized. And at some point I'm going to have to have that conversation within my own family.

Rachel: Yeah. And I think that's the thing to get excited about. You know, the thing to be excited about is that you do have so many options because sometimes people say to me, Oh, it's so complicated. So it's complicated because you've got choices. Imagine if you have no choice, it would be really simple and you wouldn't necessarily like it. So embrace the complexity because it is giving you lots of different options that you can choose from. And from an advice perspective, you know, all you then need is the support and the tools that enable you to model all the different scenarios. And I get it that can be tough, like calculating retirement village, exit fees, as you've seen, can be, there's a lot of variables that can go into those.

Rachel: And now we're seeing the retirement villages in Australia starting to offer different payment options on the same retirement village unit. So you can pay more upfront and less at the end, or you can pay more along the way and less at the end. Whereas traditionally, it's been an exit fee model and it's been fairly homogenous. They're starting to develop these really fantastic different payment options that suit different people for completely different reasons. But modeling that can be really hard if you haven't got the right tools, for sure.

Kate: Yeah. Well go to the show notes in the link below to watch that demo and linking to Rachel's website and books. So you mentioned earlier, you've got Aged Care Who Cares. You've also got Downsizing Made Simple. So any final thoughts for listeners, Rachel?

Rachel: Look, I always say to people just get empowered and take control, just get all the information that you can, get really great advice because ultimately  the advisors who specialize in this space, they're gonna know a lot more than you're ever going to be able to learn in six weeks, six months, whatever it is.  So get that and then you can make whatever those decisions are with supreme confidence and know that there's no nasty surprises down the track, which is really what everybody wants when they're making these decisions.

Kate: Yes, absolutely. And I will also be keeping an eye on this space and if, and when you expand globally, we'll definitely have you back on the show and it's been just a delight. Thank you for everything you're doing and helping to take of those that came before us.

Rachel: No problem at all. I think, like I said, I grew up with my grandma, so I love the idea that we can, we can help  our seniors  to just have the best retirement and aged care experience possible.

Kate: Yes. I love that. Fantastic. Thanks, Rachel.