Residential aged care continues to face significant financial and capacity pressures, creating challenges for both providers and the older Australians and families trying to find appropriate care.
Occupancy remains high, places can be difficult to secure, and people with complex care needs or lower financial means may face additional challenges finding suitable accommodation. Recent government reporting continues to track wait times for both residential aged care and Support at Home services.
At the same time, aged care providers are facing rising operating costs. From 1 October 2026, the Australian National Aged Care Classification (AN-ACC) price increased from $295.64 to $303.19 per resident per day, while the hotelling supplement remained at $22.15 per resident per day. The government says the AN-ACC increase incorporates funding related to the 2026 wage increases and non-labour cost growth.
Industry body Ageing Australia has reported that providers have cancelled plans for more than 2,000 new beds, citing concerns about the level of funding relative to rising costs. It also reported that almost two-thirds of aged care homes were operating at a loss. These are industry figures and should be considered in that context.
For families, this broader pressure makes planning ahead particularly important.
If you or a family member may need residential aged care, financial advice can help you understand the costs, compare your options and make decisions before circumstances become urgent.
Financial advice is an important piece of the puzzle
Aged care advice is not simply about superannuation and investments.
It can involve understanding accommodation costs, government contributions, cash flow, Centrelink and pension considerations, taxation, estate planning and how existing assets should be managed.
The Australian Government’s My Aged Care guidance explains the different accommodation payment options available, including Refundable Accommodation Deposits (RADs), Daily Accommodation Payments (DAPs) and combinations of the two.
Getting advice early can help residents and their families understand their options before a decision needs to be made quickly.
Five common mistakes financial advice may help you avoid
1. Selling the family home without understanding the consequences
Many people assume they need to sell their home to fund aged care.
That is not necessarily the case.
The treatment of the former home can depend on circumstances including how long it is occupied by a spouse or other protected person, whether it is rented and the individual’s broader financial circumstances.
Selling the home can also have consequences for cash flow, pension entitlements, tax and the family’s long-term financial position.
Before making a decision, it is worth understanding the potential consequences of selling, retaining or renting the property.
2. Being afraid to pay a RAD
A Refundable Accommodation Deposit (RAD) can be a significant amount of money, so it is understandable that families may hesitate to pay one.
However, automatically choosing not to pay a RAD may not always be the most appropriate strategy.
Residents may be able to pay their accommodation costs through a RAD, DAP or a combination of the two. My Aged Care explains how accommodation payments work, including the differences between lump-sum and daily payment options.
The right approach will depend on the individual’s assets, income, cash flow, pension position and broader financial objectives.
Running the numbers before making the decision can help determine which option is appropriate.
3. Getting confused and making decisions too quickly
Aged care rules can be complex, particularly when a family is also dealing with the emotional side of someone moving into residential care.
There can be decisions around accommodation payments, means assessments, ongoing fees, investments, the family home and government benefits.
Making decisions quickly without understanding how the different pieces interact can have unintended consequences.
Financial advice can help bring the different elements together and give families a clearer picture of their options.
4. Not planning for cash flow
Cash flow is one of the biggest considerations when planning for aged care.
It is important to understand not only how the initial accommodation costs will be funded, but also how ongoing fees and other expenses will be met.
This may involve looking at:
- Superannuation
- Pension income
- Investment income
- Bank accounts and cash reserves
- Property
- Accommodation payments
- Ongoing aged care fees
- Tax consideration
The aim is to create a strategy that provides enough liquidity to meet costs while considering the person’s broader financial position.
5. Focusing on how to avoid fees rather than how to afford the right care
Cost is naturally an important consideration, but focusing solely on minimising fees can sometimes distract from the bigger question:
How can we structure the person’s finances so they can access the care that is appropriate for their needs?
The availability of suitable residential care can already be challenging in some areas, particularly for people with complex care needs.
The government continues to publish wait-time information for residential aged care and Support at Home, highlighting the importance of understanding available options and planning ahead where possible
What does the financial pressure on providers mean for families?
The financial challenges facing aged care providers do not directly determine an individual’s fees or eligibility for care. However, they form part of the broader environment in which families are making decisions.
Providers need to manage staffing costs, food, cleaning, laundry, energy, clinical care, compliance and other operating expenses.
The government provides subsidies and supplements to support residential aged care providers, with the current funding framework setting out the different subsidies and supplements available. The Department of Health and Aged Care provides the current residential aged care subsidy and supplement information here.
For residents and families, this makes it even more important to understand the financial side of entering care rather than treating the accommodation decision as simply a matter of choosing a room.
Planning ahead can give families more choices
Aged care decisions are often made during periods of significant change.
Planning before a move is required can provide more time to understand the options and consider how decisions around the family home, superannuation, investments and accommodation payments may interact.
For SMSF members, there can be an additional layer of complexity. The SMSF may hold a significant portion of the person’s wealth, so decisions about accessing super, managing investments and considering the future of the SMSF may need to form part of the wider aged care strategy.
You can also read our guide on [Aged Care and Your SMSF: 5 Things to Consider] if you are managing aged care decisions alongside an SMSF.
Need help with aged care decisions?
These are not decisions you need to make alone.
At Holzworth Partners, we can help you understand how aged care decisions may interact with your broader financial and retirement strategy.
Whether you are preparing for a move into residential aged care, considering how to fund accommodation, reviewing your investments or trying to understand the financial implications for your family, getting advice early can help you understand your options.
Contact Holzworth Partners on 07 3999 9751 to discuss your circumstances and your next steps.
Important informationThis article provides general information only and does not constitute personal financial, taxation, legal or aged care advice. It has been prepared without considering your objectives, financial situation or needs. Aged care fees, government funding arrangements, superannuation rules and tax treatment can change over time. You should obtain appropriate professional advice before making decisions about your aged care arrangements, superannuation, investments or estate planning.