For many Australian families, aged care arrives suddenly – after a fall, a hospitalisation, or a diagnosis – leaving little time to plan. By that point, the options may already be limited. Residential aged care occupancy has now reached around 94% nationally, with some capital cities effectively operating at full capacity as providers struggle with workforce shortages, construction delays and rising demand.
At the same time, Australia’s older population continues to grow rapidly. According to the Australian Institute of Health and Welfare’s older Australians data, Australians aged 65 and over, represented around 16% of the population in 2020, with that figure projected to rise to between 21% and 23% of the total population by 2066. The proportion of Australians aged 85 and over is also expected to continue increasing sharply as the population ages.
While the 2026–27 Federal Budget includes $3.7 billion in new aged care funding – targeting more beds, faster access to Support at Home packages and better care for older Australians – many families are still being forced to make major financial and care decisions under significant pressure. Aged care preparation is now becoming an increasingly important part of broader retirement planning discussions for many households.
Aged care demand is growing faster than supply
Demand for aged care is expected to increase significantly over the next decade as more Baby Boomers move into their mid-80s, placing further pressure on both residential and home care services. Operational residential aged care places grew by just 3% nationally between FY20 and FY25, while the population aged 85 and over grew by more than 12% over the same period.
The same report found wait times for higher-level home care remain substantial, with more than 121,000 Australians waiting for Support at Home packages as of September 2025.
The Government’s 2026–27 Federal Budget aged care measures include $3.7 billion in aged care investment, including incentives aimed at supporting construction of up to 5,000 new aged care beds per year and funding to accelerate the rollout of Support at Home packages.
Even so, demand pressures continue to intensify as Australia’s population ages, and more Australians live longer with chronic illness, dementia and complex care needs.
The financial reality of aged care
Many Australians underestimate how expensive aged care can become, particularly when decisions need to be made quickly after a hospital admission or health event.
Residential aged care costs often include:
- A refundable accommodation deposit (RAD)
- Daily accommodation payments
- Means-tested care fees
- Basic daily care fees
- Additional service fees in some facilities
Families are often surprised to learn that the RAD alone can run into hundreds of thousands of dollars depending on the provider, location and level of accommodation.
In some cases, families may also need to decide whether to pay a RAD as a lump sum, ongoing daily payments or a combination of both. Each option can affect cash flow, investment income, Age Pension entitlements and estate planning outcomes differently.
These decisions are often made quickly during stressful periods, despite having long-term financial implications for both the person entering care and their family.
Home care costs are also rising. While government subsidies may help offset some expenses, many families still face significant out-of-pocket costs for higher levels of care, nursing support, allied health and home modifications.
Understanding how these costs interact with cash flow, investments, superannuation and property assets has become increasingly important when reviewing long-term retirement planning strategies. Early financial planning may also provide families with more flexibility if care needs change unexpectedly.
Why rushed decisions can become expensive
Aged care decisions are often made during periods of stress, illness or hospitalisation. In many cases, families have limited time to understand accommodation options, funding arrangements and government assessments before financial decisions are required.
Selling the family home to fund a RAD is one example that can create unintended financial consequences if not carefully considered.
Depending on the circumstances, selling a property may affect:
- Age Pension entitlements
- Centrelink assessments
- Tax outcomes
- Cash flow
- Estate planning arrangements
- The ability of a spouse to remain in the home
Some families also discover too late that different aged care payment structures can significantly affect long-term finances and inheritance outcomes.
The complexity of the system can make planning difficult without professional guidance, particularly where there are multiple assets, trusts or family considerations involved.
Why families should plan before it becomes urgent
One of the biggest challenges in aged care planning is that many families only begin exploring their options once a crisis occurs.
By that point, there may be:
- Limited bed availability
- Time pressure from hospitals
- Emotional stress
- Reduced negotiating power
- Fewer financial options available
The difference between planning ahead and waiting for a crisis can be significant – financially and emotionally.
Early planning can provide more time to:
- Understand aged care costs
- Review asset structures
- Assess cash flow needs
- Explore home care alternatives
- Consider estate planning implications
- Understand Centrelink impacts
- Discuss family preferences and expectations
With demand continuing to rise and bed availability tightening, the families best placed to navigate aged care are those who start planning before a crisis forces their hand. Reviewing future care options before they become urgent is increasingly becoming part of overall financial planning and later-life retirement planning discussions.
How RFS Advice helps with retirement and aged care planning
RFS Advice helps individuals and families understand the financial implications of aged care decisions, including funding arrangements, cash flow, Centrelink considerations and broader retirement planning strategies.
If your family is beginning to think about aged care options, home care support or future accommodation planning, speaking with an experienced financial planner may help you better understand the financial implications before decisions become urgent. Contact RFS Advice for guidance around aged care and financial planning strategies.
Frequently asked questions
A RAD is a lump sum payment that many residential aged care facilities require for accommodation. The amount varies between providers and is generally refunded to the resident or their estate when they leave care, less any agreed deductions.
Yes. The family home can affect aged care fees, Centrelink assessments and Age Pension entitlements depending on how it is treated and whether it is sold.
Limited bed availability can result in delays entering residential care, longer hospital stays or the need to accept accommodation outside a preferred location.
Not necessarily. Higher-level home care can still involve substantial costs, particularly where ongoing nursing support, specialised care or home modifications are required.
Ideally, before it becomes urgent. Starting conversations about aged care preferences, finances and family expectations while there is still time to plan, rather than in the middle of a crisis, gives families more options and more control. Speaking with an experienced Gold Coast financial adviser is a good first step.
General advice warning:
The information and any advice provided in this article has been prepared without taking into account your objectives, financial situation or needs. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to those things.
