For many families, moving into residential aged care is one of the most significant decisions they will ever make. While the focus is understandably on finding the right care and support, it’s equally important to understand the financial implications before committing to an arrangement.
Recent research has shown that aged care costs are among the biggest concerns for older Australians. Yet many families are still making decisions under tight timeframes, often without a clear understanding of the fees involved or the strategies available to reduce costs and preserve wealth.
At GDA, we regularly assist families navigating aged care transitions and see firsthand how proper planning can make a substantial difference.
The three main costs of residential aged care
- Accommodation costs
Accommodation is often the largest financial commitment. This payment secures the right to live in the aged care facility, and the amount varies between providers.
In Tasmania, accommodation costs commonly range between $500,000 to $750,000. In Sydney and Melbourne accommodation costs commonly range between $700,000 to $900,000.
Residents can generally choose to pay:
- A lump sum accommodation payment
- A daily accommodation payment
- A combination of both
The funding strategy selected can have a significant impact on:
- Cash flow
- Investment earnings
- Centrelink entitlements
- Estate value
- Long-term financial sustainability
With recent aged care reforms, additional retention amounts may also apply to certain residents entering care, making it even more important to carefully evaluate the available options.
- Daily living fees
All permanent residents contribute toward everyday living costs through a daily fee. This fee helps cover services such as meals, cleaning, laundry and utilities.
Although often viewed as straightforward, it remains an important component of the overall cost of care.
- Means-tested care fees
Means-tested care fees vary depending on an individual’s circumstances and can be influenced by factors including:
- Assets
- Income
- Home ownership
- Whether a spouse remains in the family home
- Applicable grandfathering provisions
Recent legislative changes have introduced additional care contributions for some residents, increasing the importance of understanding how personal circumstances influence fee outcomes.
Additional Fees
Some providers also charge a Higher Everyday Living Fee (HELF) for additional lifestyle services and comforts, which may include:
- Internet access
- Pay television
- Enhanced dining options
- Personalised services
These fees can vary significantly between providers and should be assessed as part of the overall affordability of care.
The mistakes we see most often
Families are frequently forced to make decisions quickly, which can result in costly mistakes such as:
- Selling the family home before all options have been explored
- Paying accommodation deposits without modelling alternatives
- Overlooking strategies that could reduce ongoing care costs and maximise any available Centrelink entitlements
These decisions are often made quickly under pressure without much consideration, rather than as part of a carefully considered financial strategy.
Why advice matters
Residential aged care is far more than a care decision. It is a complex financial decision that can affect retirement savings, family wealth, estate planning outcomes and future flexibility.
The right strategy can potentially save families tens of thousands of dollars over time while creating greater certainty and peace of mind.
At GDA, we specialise in helping families understand aged care costs, compare funding options, model different scenarios and develop tailored strategies that align with their financial goals and personal circumstances.
Need guidance?
If you or a loved one are considering residential aged care and would like clarity around the costs, funding options and financial implications, our team is here to help.
Contact our Accredited Aged Care Specialist Financial Adviser, Emma Leith at GDA on (03) 6234 4413 to arrange an appointment and make informed decisions with confidence.