Aged care costs: Planning for your future

Often, when we first meet with a new client and discuss their retirement planning, much of the initial focus is on maintaining their lifestyle, funding travel, managing investments and ensuring their superannuation lasts.

Aged care receives less attention. This is normal when we’re healthy and independent. However, circumstances can change unexpectedly. Illness, reduced mobility or the loss of a partner may create a need for additional support. The financial implications can be substantial, depending on the level of care required.

Planning ahead helps you understand your options and make informed decisions without the added pressure of an immediate need for care. At First Financial, our advisers will model scenarios that include aged care and its financial implications. Our clients find this level of analysis reveals options that make sense and add a layer of security to their retirement planning.

Australia’s aged care system provides different levels of support depending on individual needs. The current trend is to remain living independently at home for as long as possible. Government-supported home care services can assist with everyday activities, including personal care, cleaning, transport and nursing support.

Under the Support at Home program, eligible participants may be required to contribute to certain services, depending on their financial circumstances and the type of assistance they receive. Residential aged care provides accommodation and ongoing support for people who can no longer live independently. Costs can include accommodation payments, daily living contributions and care-related fees, depending on individual circumstances and applicable arrangements.

Understanding these differences is an important first step in preparing financially. Aged care expenses can influence how retirement income and investments are managed. For example, moving into residential care may require a substantial accommodation payment, depending on the facility and your financial assessment. Some people choose to fund accommodation through existing savings or investments, while others consider selling their family home.

Each approach can have different implications for cash flow, taxation, Age Pension entitlements and estate planning. Importantly, selling the family home is not always necessary or financially advantageous.

A personalised financial assessment can help determine how care costs might be funded while protecting sufficient resources for other retirement needs.

For the majority of us, the family home represents our largest asset outside superannuation. Deciding whether to retain, rent or sell the property when entering aged care can be complex.

Different decisions may affect Centrelink assessments, ongoing expenses and the financial position of a spouse who remains living at home. There may also be emotional considerations, particularly when the property has been the family home for decades.

With our help, families can understand the financial consequences before making a decision and avoid unnecessary complications.

Aged care decisions often involve adult children or other family members, particularly when health circumstances change. Discussing preferences early can make these conversations easier. Consider where you would prefer to receive care, who should assist with financial decisions and whether appropriate legal arrangements are in place.

An enduring power of attorney, updated estate planning documents and clear communication will help ensure your wishes are understood. Our experienced financial advisers can work alongside legal professionals to help coordinate these arrangements while assessing retirement income, superannuation, investments, and Centrelink considerations.

Planning for aged care isn’t about expecting the worst. It’s about maintaining independence, financial surety and flexibility as circumstances evolve.

If you’re approaching retirement, planning for later life, or helping ageing parents navigate their options, it is worth speaking with the First Financial team about incorporating aged care considerations into your financial plan.

The team at First Financial comprises financial experts who help hundreds of Australians retire well and make informed, intelligent financial decisions. We cover everything from retirement and financial advice, investment and wealth management, superannuation and SMSF, insurance, tax, aged care, legal and lending services.

Contact us for holistic, well-rounded financial management strategies.