Bob and Alison Mayer* are 87 and 84 respectively. They are on a full Age Pension. They own their own home outright. It’s an older home on a large block and has been recently valued at $780,000.

Their combined Age Pension income is currently $1,458.60 per fortnight ($37,923.60 per year).

Alison has dementia and receives a Level four package with a dementia supplement. Bob provides Alison’s care needs together with the support of 11 hours per week from a provider.

Alison’s care needs have increased significantly, and Bob is both exhausted and stressed. The children have suggested it is now time he looked at residential care for Alison. Bob is adamant he wants them to remain at home for as long as possible.

Bob decides to draw down $16,000 per annum ($615.38 per fortnight) to cover the additional costs of private care by topping up their government funded care package.

The arrangement also provides more personal care hours than in an aged care home (4 hours per day compared to an average of less than 3 in a residential care home).

Over 5 years, Bob and Alison would build up a loan of $89,115 (including compound interest of $8,616).