Securing a comfortable and enriching life in your later years: navigating aged care

Planning how to pay for aged care should consider all available resources, from personal savings and superannuation to government support and the aged pension.

Most Australians aim to pay aged care costs from their traditional income sources like the age pension and superannuation before having to tap assets like personal savings. Also available but less commonly used are financial products like equity release schemes, aged care loans, and personal loans.³

Involving family members in the discussion is important. Family members can provide alternative perspectives and help you ensure decisions are made objectively. They may also help identify options you may not have considered. Being transparent with your family can mitigate concerns about estate management and ensure decisions align with your wishes and best interests.

Perhaps most importantly, family can offer emotional support and ease the stress of decision making.

Consulting with a financial adviser can also be worthwhile. Advisers can help you plan and budget for your individual aged care needs. The federal government’s free Financial Information Service is a good place to start, with live and recorded webinars as well as the option of phone, video chat, or face to face appointments.

Exploring aged care options

Home care

In-home care helps support people who wish to stay in their own homes for longer by helping with everything from daily tasks like cooking, cleaning, and bathing to comprehensive care options like nursing and rehabilitation.

The cost of this assistance is supported by the Commonwealth Home Support Programme and Home Care Packages, with government subsidises provided to various organisations across Australia.

Providers set their own fees based on the level of care required and you may need to contribute to the cost based on your income. Eligibility for government support requires an assessment, which is usually done in person at your home.⁴

Residential care in aged care homes

Residential care in aged care homes is for people who can no longer live at home and need ongoing help with everyday tasks or health care. These homes offer a range of services including personal and nursing care, meals, laundry, and social activities.

The government subsidises a range of aged care homes and there are also non-government funded providers available.

Short-term care

Short-term care provides support for a set period from a few days to months at a time to help with day-to-day tasks and to restore or maintain independence. 

The government subsidises short-term care for people assessed as eligible, but you will need to contribute if you can afford it. The maximum amount payable for people assessed as eligible for short-term restorative or transition care is $12.75 per day for care received at home and $61.96 per day for care in a residential setting.⁵ For residential respite care in an aged care home, fees will include the basic daily fee, and potentially also a booking fee and extra service fees.

Retirement villages

Retirement villages, often termed ‘independent living villages’, are regulated by state and territory governments and offer residents an independent lifestyle enhanced by community engagement.

Costs generally involve an upfront entry fee, ongoing maintenance fees, and potentially additional charges for extra services. These villages are designed for seniors desiring a low-maintenance lifestyle, featuring amenities like social clubs and recreational facilities. Retirement villages are different from residential aged care because they have less of a focus on medical and care services and instead cater to people who do not need care and are seeking social activities and independence.

Fees for residential aged care are broken down into four⁶ components:

1. A basic daily fee (the maximum is currently $61.96 per day) payable by everyone for living expenses and charged as a lump sum, daily payment, or a combination of both.
2. An accommodation payment that is means tested and covers the cost of the room. This fee varies and can attract a government subsidy of up to $68.14 per day. Accommodation payments can be paid as a lump sum (known as a ‘refundable accommodation deposit’) or a daily payment or a combination of both. Without regulatory approval, the maximum a provider can charge for a room or part of a room is $550,000 or the equivalent daily payment. However, thousands of places are approved each year above that limit.
3. A means-tested care fee, capped at $33,309.29 per annum with a lifetime cap of $79,942.44. This covers the cost of ongoing health care.
4. An extra service fee that covers additional amenities above the minimum standard.

Eligibility for government assistance is based on need and determined through an assessment. To be eligible, you must be unable to live independently at home. Typical scenarios that trigger eligibility include changes in what you can do or remember, diagnosis with a medical condition, or a recent fall or hospital admission.

Your financial situation does not affect your eligibility to live in a government-subsidised aged care home, but it does impact the amount you have to pay.

Ultimately, choosing residential aged care is a complex process with many interacting features. Many choose to seek help from a financial adviser to assess the best options.

Making your home more comfortable as you age⁸

As we age, our living spaces need to adapt to match our changing needs.

Making changes to your home can help you stay independent for longer, allowing you to continue with your familiar routines and maintain local community ties. This can contribute to better mental health.

The cost of making changes to your home is typically lower than the cost of moving into retirement accommodation or aged care.

Modifying your own home also lets you make specific changes that suit your individual needs and preferences as not all changes are needed for all people.

Some common changes to consider⁹ include completing any outstanding repairs, removing clutter to prevent tripping, keeping your home brightly lit and adding night lights, adding non-slip flooring to stairs and in bathrooms, and checking and replacing smoke detectors. If required, larger changes¹⁰ may include installing grab rails in bathrooms, changing floor coverings to reduce trip hazards, and installing a personal safety alarm.

Government assistance may be available to help with the cost of modifications.

For further information on aged care and support options available, visit the Australian government’s comprehensive My Aged Care website.