Super and Aged Care Costs: What You Need to Plan For
Aged care, whether at home or residential, often becomes one of the largest financial decisions of later life — and superannuation frequently plays a central role in funding it.
How aged care fees generally work
Aged care costs in Australia typically combine a basic daily fee, a means-tested care fee (based on an assessment of your income and assets, which can include your super), and — for residential care — either a lump sum refundable accommodation deposit or an equivalent daily accommodation payment, or a combination of both. The specific combination and amounts depend on an individual means assessment through Services Australia or the Department of Veterans' Affairs.
Why super often features heavily in the decision
Because aged care means-testing considers your assets and income (with your home sometimes exempt or partly exempt depending on circumstances, such as whether a partner still lives there), superannuation held in accumulation phase or as an account-based pension is often one of the more significant assessable assets in this calculation — meaning decisions about how and when to draw down super can materially affect aged care fees.
The interaction with your Age Pension
Aged care costs and Age Pension entitlements are assessed somewhat separately but both draw on similar underlying asset and income information — see Superannuation and the Age Pension for how the pension side works. Decisions made around aged care (such as whether to sell the family home to fund a deposit) can flow through and affect Age Pension entitlement as well.
Funding a refundable accommodation deposit
Some people choose to pay all or part of the accommodation cost as a lump sum (often funded partly through their super), while others pay it as an ongoing daily payment instead, preserving more capital but incurring an ongoing cost — the right choice depends heavily on individual asset position, cash flow needs, and family circumstances, and is often worth professional advice given the amounts involved.
Why planning ahead matters
Aged care decisions are often made under time pressure, following a health event or crisis, which makes it harder to plan optimally in the moment. Understanding roughly how your own super and assets would be assessed, and discussing preferences with family in advance, can make a difficult period considerably less stressful when the time comes.
Frequently asked questions
Does my family home count toward aged care means testing?
It depends on circumstances — it can be exempt or treated differently if a spouse or certain other protected persons continue to live in it, so this is worth checking carefully for your specific situation.
Can I use my super pension income to pay ongoing aged care fees?
Yes, many people fund ongoing daily and means-tested care fees from their regular super pension income, alongside other income sources.
Should I get financial advice before making aged care decisions?
Given the amounts involved and the interaction with the Age Pension, a financial adviser with specific aged care experience (or an accredited aged care financial adviser) can be genuinely valuable here.
Aged care fee structures, thresholds and means-testing rules are set by government and change regularly — confirm current details on myagedcare.gov.au and servicesaustralia.gov.au.
This article contains general advice only. It has been prepared without taking into account your personal objectives, financial situation or needs, and does not constitute a recommendation to acquire, hold, or dispose of any financial product. Before acting on this information, consider its appropriateness to your own circumstances, and seek independent financial, tax and/or legal advice, or speak with a licensed financial adviser, before making any decision.
