A simple way to understand your options during an important decision
Moving into aged care is rarely just a financial decision.
It often comes at a time when families are already dealing with change, uncertainty, and emotion.
Alongside that, there is usually one big question:
How do you actually pay for it?
Understanding paying for aged care doesn’t need to be overwhelming. At a high level, there are a few key components that shape most decisions.
The two main costs to understand
When entering aged care, there are generally two key types of costs.
1. Accommodation (RAD or DAP)
This is the cost of the room.
You will often hear:
- RAD (Refundable Accommodation Deposit)
A lump sum paid to the aged care provider - DAP (Daily Accommodation Payment)
An ongoing daily payment instead of a lump sum
In many cases, you can use a combination of both.
2. Ongoing care costs
These typically include:
- basic daily care fees
- means-tested care fees (depending on your financial position)
These costs are usually paid from:
- income
- investments
- or super
What happens to the family home?
This is one of the most common concerns.
The home may be:
- kept
- rented
- or sold
Each option has different impacts on:
- cash flow
- aged care fees
- and Centrelink assessments
Because of this, the decision around the home is often one of the most important.
A simple example
Let’s say someone moves into aged care and needs to cover:
- accommodation costs
- and ongoing care fees
They may choose to:
- use part of their savings or superannuation
- sell the home and use the proceeds
- or structure payments over time
There is no single approach.
The right option depends on:
- available assets
- income
- and family preferences
Why structure matters
Two families can face the same situation and make very different decisions.
The difference often comes down to:
- How assets are structured
- How income is used
- and how decisions are timed
This can impact:
- ongoing fees
- cash flow
- and long-term outcomes
Where Centrelink comes into play
Aged care decisions are closely linked to Centrelink.
Your assets and income can affect:
- means-tested care fees
- Age Pension eligibility
Because of this, decisions around:
- the home
- investments
- and payment structures
can all influence the overall outcome.
A more practical way to think about it
Rather than focusing on a single decision, it helps to think about:
- How to fund care costs
- How to manage cash flow
- and how to preserve flexibility
This often involves a combination of:
- lump sum payments
- ongoing income
- and structured use of assets
Where this fits into a broader strategy
Aged care planning doesn’t sit on its own.
It often links with:
- retirement planning
- estate planning
- superannuation strategies
- and family considerations
It also forms part of broader retirement planning advice and overall superannuation advice.
Things to be aware of
Several rules and thresholds apply.
These can affect:
- How much do you pay
- How assets are assessed
- And what options are available
Because of this, it’s important to understand your position before making decisions.
The Australian Government provides further details on aged care costs here:
https://www.myagedcare.gov.au
The takeaway
Aged care decisions can feel complex, particularly during an already difficult time.
However, at a high level, it comes down to:
- understanding the costs
- knowing your options
- and making decisions that fit your overall situation
Understanding paying for aged care is not about finding one answer, but about finding the right structure.
Next steps
If this has raised a few questions, that’s usually a good sign.
This isn’t just about covering costs; it’s about understanding how those decisions impact your financial position and your family.
If you’d like to explore this further, we can map it out properly and run through the numbers.
As always, this is general information only and does not take into account your personal circumstances.