Australian residential aged care generally involves three costs: a basic daily fee, a means-tested care fee based on your income and assets, and an accommodation payment for your room (paid as a lump sum, a daily amount, or both). Planning ahead — especially around the family home — helps fund good care without unravelling the rest of your plan.
Few financial conversations are put off as often as this one. Aged care feels distant, and slightly daunting, right up until the day it is suddenly urgent — usually after a fall, a diagnosis, or a quiet realisation that a parent isn’t coping alone. Planning ahead takes the panic out of it.
Plan before it’s a crisis
Decisions made calmly, with information, are almost always better than decisions made in a hospital corridor. Understanding the system before you need it means that when the day comes, you’re choosing — not scrambling.
The layers of cost
Residential aged care costs can feel opaque, but they generally fall into a few parts:
- A basic daily fee — a standard contribution towards everyday living, set as a percentage of the Age Pension.
- A means-tested care fee — an additional amount based on your income and assets.
- An accommodation payment — effectively the cost of your room, which can be paid as a lump sum, a daily amount, or a combination.
The goal isn’t to spend the least. It’s to fund good care without unravelling the rest of the plan.
The family home question
The hardest decision is often what to do with the family home — keep it, rent it, or sell it. Each choice ripples through the means-test, the Age Pension, and the estate in different ways. There is rarely one right answer, but there is usually a best answer for your situation, and it’s worth finding before the contracts are signed.
Home care versus residential care
Many people would prefer to stay in their own home for as long as possible, and home care packages can make that possible. Weighing the cost and capacity of home care against a residential place is part financial, part deeply personal — and it deserves both lenses.
Where advice earns its keep
This is an area where good advice frequently pays for itself many times over — in fees avoided, entitlements preserved, and stress spared. More than that, it lets a family focus on what actually matters in those moments: the wellbeing of the person they love, rather than a spreadsheet they don’t understand.
Key takeaways
- Residential aged care costs typically fall into a basic daily fee, a means-tested care fee and an accommodation payment.
- The means-tested care fee depends on your income and assets.
- How you treat the family home affects fees, the Age Pension and your estate.
- Home care packages may let you stay in your own home longer as an alternative to residential care.
Frequently asked questions
How much does aged care cost in Australia?
Costs vary, but residential aged care generally includes a basic daily fee, a means-tested care fee based on your income and assets, and an accommodation payment for your room. Your total depends on your finances and the home you choose.
Do I have to sell the family home to pay for aged care?
Not necessarily. The home can be kept, rented or sold, and each choice affects the means-test, Age Pension and your estate differently. It is worth getting advice before deciding.
What is the difference between home care and residential care?
Home care packages support you to stay in your own home, while residential care provides accommodation and care in an aged-care home. The right choice is partly financial and partly personal.