What does aged care actually cost? A simple breakdown
For many Australians, aged care is one of the biggest unknowns when it comes to retirement planning.
Clients often ask questions like:
● Will I have to sell my home?
● How much will residential aged care cost?
● Is home care cheaper?
● Will the Government pay for everything?
The answer is that it depends.
Aged care costs vary based on the type of care required, an individual's financial circumstances, and the provider they choose. While the system can appear complex, understanding the basics before care is needed can help clients make more informed financial decisions and avoid unnecessary stress later.
The first step is understanding the different care options
Many people think "aged care" refers only to residential care, but there are several different pathways depending on a person's needs.
Support at Home (home care)
Many older Australians prefer to remain in their own home for as long as possible.
Government-funded home care programs (the Support at Home program) and privately funded services can provide assistance with personal care, cleaning, meal preparation, nursing, transport and allied health services.
For clients wishing to age in place, understanding how home care works is an important part of long-term retirement planning.
Retirement living
Retirement villages are designed for people who can continue living independently while enjoying a more manageable lifestyle and access to community facilities.
It's important to remember that retirement villages are not aged care facilities. Every operator has its own pricing structure, contract terms, ongoing service fees and exit arrangements, making it essential to compare options carefully before making a commitment.
Residential aged care
When a person can no longer live safely or comfortably at home, residential aged care may become the most appropriate option.
This is where many clients become overwhelmed by the different fees and payment options.
Understanding residential aged care costs
Residential aged care costs are generally made up of several components.
Accommodation costs
Accommodation is paid for separately from the care itself.
Depending on a person's financial circumstances, they may be required to contribute towards their accommodation through:
A Refundable Accommodation Deposit (RAD) - a lump sum that is generally refunded to the estate when the resident leaves the service, less any agreed deductions.
A Daily Accommodation Payment (DAP) - a daily payment instead of paying a lump sum.
Or a combination of both.
The amount charged varies between providers and can differ significantly depending on factors such as location, room type and amenities.
For example, two homes in the same suburb may offer similar levels of clinical care, but one may require a substantially higher accommodation payment than the other.
Everyday living costs
All residents contribute towards everyday living expenses such as meals, cleaning, laundry, heating and cooling.
This is paid through the Basic Daily Fee, which is set by the Australian Government and is the same regardless of which provider a resident chooses.
Means-tested care fees
Some residents may also pay a means-tested fee based on their income and assets.
Not everyone pays this fee, and the amount varies depending on an individual's financial circumstances.
Understanding how assets and income are assessed is an important part of financial planning before entering care.
Additional service fees
Some providers also offer optional premium services, such as enhanced dining, larger activity programs or additional lifestyle services.
These costs vary between providers and should always be considered when comparing different facilities.
Home care also involves costs
While government funding may assist with home care, there are still financial considerations.
Clients may choose to purchase additional private services, increase their level of support or access services not fully covered by government funding.
Understanding these potential future expenses helps clients prepare for the possibility of receiving support at home before residential care becomes necessary.
Why planning ahead matters
One of the biggest challenges families face is that decisions about care are often made during a crisis.
A fall, illness or hospital admission can leave very little time to understand costs, compare providers or seek professional advice.
Planning ahead gives clients the opportunity to:
● understand the different care pathways available
● consider how future care fits within their retirement goals
● review housing decisions and assets
● understand how aged care may affect their financial position
● discuss preferences with family before decisions become urgent
Early planning often leads to better financial outcomes, greater choice and significantly less stress for everyone involved.
How financial advisers can add value
Future care planning is becoming an increasingly important part of holistic retirement advice.
While advisers provide valuable financial guidance, many clients also need practical support navigating the aged care system itself.
Understanding provider options, comparing accommodation costs, interpreting contracts and coordinating the transition into care can quickly become overwhelming for families.
By introducing these conversations early, advisers can help clients prepare for one of retirement's most significant financial events before it becomes a crisis.
How Care & Co Match can help
Care & Co Match works alongside financial advisers to help clients navigate aged care, home care and retirement living with confidence.
Our experienced Care Concierge team provides independent guidance, helps clients understand their options, researches suitable providers and supports families through the decision-making process.
Together, advisers and Care & Co Match help clients make informed financial and care decisions that align with their goals and provide greater peace of mind.
Contact us
1300 585 759
concierge@careandcomatch.com.au
careandcomatch.com.au