Aged care – how advisers can add value

Aged care costs, government assistance and asset tests are complex and based on personal details.

Your neighbours and friends might be able to tell you about their experiences with their mums, dads, partners and friends going into care, but your experience is likely to be different as it is based on a number of factors: income, assets and relationship status.

Aged care facilities, too, can vary greatly – and so can their charges but here is an overview which may give you some ideas of what is available and how the payments may be structured.

Firstly, don’t panic. You don’t need to have a deposit of hundreds of thousands of dollars before entering an aged care facility. Even if the room cost is a few hundred thousand dollars there is usually great flexibility in how to pay.

There are costs and benefits associated with the different ways and they are specific to your personal circumstances. Even if you’ve never sought financial advice before – this is a time where you’ll greatly benefit from expert guidance.

Firstly, Home Care. This is accessed through My Aged Care – you will need to have an assessment before you can access services. This may take some time – months in many cases – so you need to register as soon as you think you might need care.

The Government would prefer people stayed at home as long as possible as places in Aged Care facilities are limited. Therefore, they provide different levels of care to enable you to stay in your own home.

 This can include, cleaners, personal carers, gardening help, shopping help, meals preparation and more.

However, looking at care facilities outside the home there is a range – from retirement villages and communities, assisted living, and aged care homes.

Retirement villages are administered through the states. Different states have different rules about contract conditions, disclosure statements and resident’s rights. You need to read your contracts carefully – and again seek professional advice.

Typically, retirement villages sell you a unit, generally at a discount rate to similar properties in the same location. However, the arrangement – usually seen more as a lease, sees the retirement village retain a certain amount of your unit price as a payment for being part of the village. This can vary – but one example might be that over five years you lose 30% of your purchase amount. This means when you leave you or your estate will have only 70% of your purchase price returned. Further, there may be no capital gain provided on the property (similarly, no capital loss).

On top of the cost of your unit, there is usually an additional fortnightly or monthly charge for maintenance and other services. 

In purchasing a unit in one of these facilities you are paying for a lifestyle. These range from over 55s, to over 70s and you are typically living with like-minded residents with communal areas to enjoy.

You are also typically in areas where home care services are easier to access. These will incur additional charges.

But you need to closely read the contract. For example, is there an ability for the facility to terminate your accommodation if you become incapacitated?

According to Aged Care Steps financial adviser Jennifer Langton, most retirees are happy with retirment community living and the financial arrangements. 

“In a survey of retirement villages, the most common feedback [from residents] was people regretting not moving in earlier,” Langton says.

However, it is important for residents to discuss the financial arrangements with their families, so they understand the implications.

Assisted care living

Typically, these facilities are similar to retirement villages where you have your own private unit with communal areas to socialise in, but they also provide access to additional care and assistance as needed.

Staff are available to assist residents with daily living activities from personal care, showering etc, to attending doctor’s appointments, preparing food and security.

Finance for assisted living is similar to retirement village purchase, plus additional monthly care fees for the services required. Your government funded home care package may cover some of the costs for care services.

Aged care homes

These are residential properties that provide full care services plus accommodation. Costs vary by geographic location – a more expensive neighbourhood will generally mean a more expensive room. The size of the room and the view may also impact the cost.

Care is available for all Australians.  Those who have limited means, may not be required to pay the advertised room cost.  Instead they will be asked to contribute towards their accommodation based on an assessment of their means. This might limit your choice of rooms and facilities but does not mean you will not be able to access residential care.   

The more money you have, the more choice you have, says Langton

“You might be able to afford a private group home, or a room with a view in a regular aged care facility.

“The mistake people make is that you need a lump sum to pay for this.

“You can often structure your finances to make it work. For example, if you have a room cost of $700,000 and you only have $300,000 you may think your only option is to sell the house. Sometimes selling a home can give the worst result.”

The excess home amount may trigger a loss of pension.

Other options to access your funds may include taking out a reverse mortgage.

The way the payments for aged care accommodation work is the room cost can be paid in full or in part. This amount is called a RAD (refundable accommodation deposit). The more you pay upfront the less you pay as a DAP (daily accommodation payment).

There is still a need to pay additional fees including a daily care fee which is set by the government (currently around $65) and perhaps another fee depending on a means test and additional fees for hotel style services set by the aged care facility.

If might be a good idea to have a look at what is available in the area you are interested in so that you have some idea of costs and charges – and accommodation options.

New legislation is coming into effect form November 2025 regarding aged care fees and charges.

You should ensure that any adviser you see is an accredited Aged Care Specialist – access the FAAA’s Find a Planner directory here.

The Money & Life website is operated by the Financial Advice Association (FAAA). The views expressed in this article are those of the author and not those of the FAAA. The FAAA does not endorse or otherwise assume responsibility for any financial product advice which may be contained in the article. Nor does it endorse or assume responsibility for the information.