With the new aged care reforms rolling out from 1 November 2025, many Australians face significant decisions that could impact their retirement savings and lifestyle. Navigating the financial side of aged care is crucial
to avoid unexpected costs and preserve wealth for you and your family. This article breaks down key financial planning tips, funding options, government subsidies and protections under the new system to keep you informed and prepared.

BUDGETING FOR AGED CARE
What’s changing?
The reforms introduce new costs alongside enhanced protections:

The maximum Refundable Accommodation Deposit (RAD) cap for residential care increases to $750,000, indexed annually.

Providers can charge an exit fee of 2% per year (up to 10%) of the RAD when you leave care.

Daily accommodation payments (DAPs) will now adjust with inflation twice a year.

A new means tested services contribution applies for personal (non-clinical) care, but the government fully subsidises clinical care.

Crucially, a lifetime means tested fee cap of $130,000 limits total contributions across all care types, protecting your savings from unlimited fees.

These changes mean it’s more important than ever to understand your aged care costs upfront. Ask providers for clear quotes and include these in your retirement budget.

FUNDING STRATEGIES
What are your options?
Australians can fund aged care through a mix of:

  • Government subsidies
    Most home and residential care fees are partly or fully subsidised depending on your financial situation.
  • Sale or use of a family home
    Many use the family home to finance accommodation deposits or top up care fees. It’s important to seek advice on the best approach to protect family inheritance.
  • Home equity release products
    New financial products allow elderly homeowners to access home equity without selling but come with complexities and costs to fully understand.
  • Superannuation and savings
    Using super or savings early requires balancing aged care needs with future financial security.
  • Income streams and investments
    Retirees must assess how aged care payments interact with pension eligibility and investment returns.

Consult our specialist financial advisers who are familiar with aged care to tailor a plan that fits individual circumstances, goals and legacy wishes.

GOVERNMENT ASSISTANCE AND SUBSIDIES
The Australian Government provides a range of assistance:

  • Home Care Packages transition into the Support at Home program, providing targeted subsidies based on assessed care needs.
  • The Commonwealth Home Support Programme (CHSP) offers entry level services with subsidies to keep you independent at home.
  • Means tested fee reductions and exemptions may apply depending on assets and income.
  • Aged care residents receive fully subsidised clinical care, removing a major cost burden.
  • Various grants and allowances exist for home modifications, equipment loans and carers’ support.

Understanding eligibility and applying early is vital to maximise support and reduce out of pocket payments.

PROTECTING YOUR RETIREMENT SAVINGS AND INHERITANCE
The introduction of a lifetime cap on means tested fees is a landmark change, limiting how much you pay during your care journey.

Once you hit this $130,000 cap, you won’t be charged further means tested fees, preserving your estate for beneficiaries. This cap includes home care and residential fees combined.

Other steps to protect wealth include:

  • Discussing care preferences and budgeting with family and advisers early.
  • Considering insurance and annuities designed for aged care costs.
  • Reviewing wills, powers of attorney and advance care directives in the light of changed financial risks.

TIPS FROM OUR FINANCIAL PLANNERS

  • Start planning for aged care costs realistically, factoring in increased accommodation deposits and fees.
  • Keep detailed records of all income, assets and payments related to care for transparency and future reference.
  • Engage proactively with My Aged Care and aged care providers for fee quotes and financial counselling.
  • Seek advice from qualified aged care financial consultants. Don’t rely on generic retirement advice alone.
  • Plan for care needs and lifestyle, ensuring funding strategies allow for both quality of life and security.

To sum it up…

The aged care reforms effective 1 November 2025 bring greater rights and support but also new financial responsibilities.

Being informed, planning early and working with expert advisers are vital to protecting retirement savings and maintaining lifestyle choices.

With a lifetime fee cap and government subsidies in place, there’s reason for optimism, but preparation remains the key to peace of mind.

For tailored guidance, reach out to our financial planning specialists in aged care to help navigate your unique situation confidently.