As life expectancy increases in Australia, it’s more important than ever to future-proof your finances when it comes to preparing for potential long-term care costs. Why? Because the longer we live, the longer we may need care, and the longer our retirement savings may have to cover the costs of these care services.
In this article, we’ll explore the benefits of preparing early, explain your long-term care options, and offer practical ways you can start future-proofing your finances for long-term care today.
The Benefits of Preparing for Long-Term Care Costs
Financial planning for retirement is all about creating a plan that funds your desired future lifestyle. A huge part of this, but one that is often overlooked, is longevity planning, aka long-term care planning.
More than just ensuring you’re covered in your golden years if anything goes wrong, engaging in long-term care planning has several benefits, including:
- Increased Autonomy & Choice: Being proactive in your longevity planning while you’re still in good health gives you greater autonomy in outlining your preferred care options.
- Reduced Burden on the Family: Planning ensures that your loved ones don’t have to make complex decisions without knowing your preferences. It also ensures they don’t shoulder the full financial and emotional burden of your care.
- Peace of Mind: Knowing you have a plan in place provides assurance for both you and your family should any health issues arise.
- Protects Your Assets & Savings: Planning early means you don’t have to make last-minute, costly decisions, protecting your savings and investments from being depleted by care costs.
Long-Term Care Options For Seniors and Their Costs
In Australia, long-term care options for seniors include residential aged care and at-home support, both of which are subsidised by the Australian government.
Explore the different long-term care options and their associated costs below.
Residential Aged Care
Residential aged care homes, also referred to as nursing homes, are specialised facilities that provide round-the-clock care for high-needs individuals who can no longer live safely or independently at home. For example, they might have a worsening chronic health condition that requires constant attention or mobility issues that make it hard to get around without assistance.
The offerings of nursing homes can be divided into three categories:
- Accommodation: Private or shared furnished room with all the works.
- Daily Living Services: Day-to-day services such as cleaning, basic toiletries, laundry, and providing meals.
- Care and Support Services:
- Personal Care: Assistance with personal hygiene, getting up and about, toileting, eating, medication administration, and social activities.
- Clinical Care: Special bedding, nursing care, health and pain management, mobility devices, and therapy services.
According to My Aged Care, the cost of residential aged care can be broken down into four categories, including:
-
- Basic Daily Fee: A mandatory fee of $65.55 per day that covers the provision of meals, cleaning, laundry, and utilities.
- Contributions Based on Your Means Assessment:
-
- Hotelling Contribution: Additional fee to meet the costs of daily living services such as gardening and maintenance.
- Non-Clinical Care Contribution: Additional fee to meet the costs of personal care services such as bathing, mobility assistance, and lifestyle activities.
- Means-Tested Care Fee: The Australian Government pays for the cost of your care in a nursing home. Depending on your income, you may be required to contribute to this in the form of a fee.
- Accommodation Costs: What you may be required to pay to cover room costs. The exact dollar amount will depend on your means assessment.
- Optional Costs: If you want to receive a higher level of services, you may have to pay the optional higher everyday living fee (HELF) in addition to what you’re already paying.
In-Home Care & Support
In-home care and support is exactly what it sounds like: receiving care and support services in the comfort of your own home. This type of care enables seniors to keep living independently in their home while receiving help, which may come in the form of:
- Domestic assistance, including help with cleaning and laundry
- Provision or preparation of meals
- Help with personal care, such as bathing and dressing
- Nursing care, including the management and monitoring of medical conditions
- Allied health and therapeutic services
- Provision of transport or transport vouchers
- Home adjustments and maintenance services to keep your home safe
- Equipment to help with daily activities
- Social and community engagement, including transportation and company
There are two key programs under which you can receive funding for home care and support in Australia:
Commonwealth Home Support Program (CHSP)
CHSP provides entry-level support for individuals who live largely independently but require assistance with a few specific tasks. For example, Hilary, 74, lives on her own and handles her own meals, transportation, and personal care, but needs assistance with home cleaning and maintenance.
The support available is task-based, meaning your providers will receive funding, which they will then allocate their services based on availability and capacity. To determine your eligibility for support through CHSP, you must complete an aged care assessment via My Aged Care.
It is important to note that while CHSP providers receive government funding, you are required to pay a small fee to help cover costs. This policy is designed to ensure that people who can afford to contribute do so, while protecting those who can’t. If you’re worried you won’t be able to afford the contribution, please discuss it with your CHSP provider; they will always have a policy in place to help those experiencing financial difficulties.
Support at Home Program (SAH)
SAH replaced Home Care Packages (HCP) as of November 2025 and provides more extensive support than CHSP. SAH is designed for individuals who require frequent, coordinated assistance across various categories.
For example, Clint, 70, has diabetes and has been diagnosed with early-stage dementia and requires more complex, coordinated support that includes personal care, meal provision, transportation, and nursing care.
Under SAH, you, the individual, are allocated a quarterly budget based on your needs. After you complete the relevant assessments, you will be assigned a classification that determines your funding for in-home support under SAH.
You will be required to make contributions to cover the cost of some of these services; however, the exact amount will vary for everyone. The type of service you receive will impact the amount you need to contribute. For example, clinical supports require no contribution on your behalf, whereas independence and everyday living services do. You will also need to complete an income and assets assessment, which will further impact your contribution amount.
Short-Term and Respite Care
Not necessarily a form of long-term care, but something definitely worth planning for: short-term care refers to care provided to an elderly individual on a temporary basis, such as when they are recovering from an injury or surgery. Respite care, on the other hand, is temporary care that provides relief to caregivers and can range from a few hours to a few weeks or even months.
Short-term and respite care can be provided in the home or within a residential aged care facility, of which the primary government-funded options are:
- Residential Respite Care: Provision of temporary stays in an aged care home (up to 63 days a year with potential to extend). Government subsidies are paid directly to the provider, while the recipient pays a mandatory daily fee.
- Transition Care Program (TCP): Short-term care designed to assist individuals recovering from a hospital stay. You will be required to contribute to your care, though your access won’t be affected by your ability to pay.
- Community Cottage Respite (Under CHSP): Care to support you and your carer temporarily. Provided in aged care accommodation or a community setting. See above for related costs.
- Home or Community General Respite (Under SAH and CHSP): Care to support you and your carer temporarily. Provided at home, in a community centre or aged care home. See above for related costs.
Tips for Preparing for Long-Term Care Costs
Financial planning for long-term care may seem overwhelming, but it doesn’t have to be. We’ve put together some practical tips you can get started on today to make the whole experience a little more seamless and less stressful for you and your family.
Start Early
Some people put retirement and long-term care planning off until it’s too late, after all, out of sight, out of mind, right? However, financially planning for your retirement is the most important thing you can do to secure your finances and reduce stress when you finally reach that age.
Whether you’re 35 or 55, it’s never too early to start financially planning for your potential long-term care costs. In fact, the sooner you have a plan, the more rewards you can reap from it.
The benefits of early planning are
- More time to grow your savings and benefit from compound interest
- More control over your preferred care options
- Peace of mind knowing you have a plan for your future
- Ability to adjust as circumstances change without being too reactive
Educate Yourself on Long-Term Care Options and Their Related Costs
Making yourself aware of the long-term care options available to you is one of the first things you should do; after all, how can you engage in long-term care financial planning if you don’t know what’s available to you?
Fortunately, by reading this article, you’ve already completed the majority of this step. For more comprehensive information about your long-term care options and their costs, head to My Aged Care, the Australian Government’s central hub for accessing funding and information related to aged care and support services.
Involve Your Family in the Conversation
Involving your family or loved ones in conversations about long-term care planning can make the process feel a little more approachable. Don’t get us wrong, it’s a difficult conversation to broach, but an incredibly important one, and trust us, you’ll be glad that you did.
By educating your loved ones about your preferences, they will be better positioned to advocate for you and make decisions on your behalf if needed. Doing so also lessens their decision-making burden as they’re already aware of what you would have preferred.
It’s important to discuss financials with your family as well, so they’re aware of how you plan to fund your care. In this conversation, it’s important that you’re transparent and honest, and that you listen to what your loved ones have to say, so as to increase their peace of mind and ensure the financial burden of your care doesn’t fall on them.
Beyond the above, having these types of conversations with your family encourages open dialogue, making it easier for both you and them when similar topics come up.
Calculate Your Likelihood of Needing Care
While it’s nearly impossible to predict if you’ll face ill health in the future, there are a couple of ways you can gauge the likelihood of needing long-term care.
Consider the following:
- Health History: Individuals with a history of smoking, excessive drinking, or a sedentary lifestyle may be more at risk of needing long-termcare.
- Family History: Those with a family history of chronic conditions, cancer, Alzheimer’s, or dementia may be more prone to disability and thus may be more likely to need long-term care.
- Marital Status: Partners can often serve as caregivers, so those who are unpartnered or widowed may require additional assistance.
- Gender: As of June 2024, almost 2 in 3 people receiving home support and aged care services were women, because they statistically live longer than men.
Consider Your Method of Payment
It’s always best to be proactive, not reactive, when planning your finances to avoid future strain and promote peace of mind that everything is in order well before you need it. A huge part of this is educating yourself about the different ways to pay for long-term care, as it informs the financial decisions we make today that affect our future financial situation.
To reiterate, long-term care services in Australia are primarily funded through a mix of government subsidies and individual contributions. This system is designed to make care more affordable for vulnerable individuals, with the government covering a larger share of the costs for those struggling financially.
To cover their individual contributions, many leverage a mix of superannuation, investments, savings, personal assets, and, in some cases, family assistance. The amount an individual is required to contribute will differ from that of another, as it is based on their income, assets, and the type of care being provided.
Regardless of the specific amount you’re required to contribute, it pays to be aware of your options and implement solutions today to protect you and your family’s financial future.
