If you’re part of the Sandwich Generation, you’re likely managing the delicate balance of caring for ageing parents while supporting your children. It’s a rewarding yet challenging responsibility, and when aged care decisions arise, the financial and emotional stakes can be high.
With new aged care legislation taking effect from July 2025, now is the time to understand the financial landscape, plan ahead, and ensure your parents receive the care they need without jeopardising your own future.
Why Aged Care Planning Needs to Happen Now
Australians are living longer, leading to a greater need for aged care services. While this is a positive shift, many families underestimate the urgency of planning. The need for aged care can arise unexpectedly—after a fall, sudden illness, or a gradual decline in health. With high demand for quality facilities, families are often required to make quick decisions under pressure, sometimes within days.
Without financial planning, the cost of care can place significant strain on savings, and decisions made in haste may result in higher long-term expenses. The new Aged Care Act (July 2025) brings major changes, meaning anyone entering care from this date will face a different cost structure. Those who secure care arrangements beforehand may be protected under existing rules.
Understanding the Costs of Aged Care
Aged care is a significant financial commitment, involving both upfront and ongoing costs. These can include:
- Accommodation costs – Refundable Accommodation Deposits (RAD) or Daily Accommodation Payments (DAP).
- Daily care fees – Covering meals, utilities, and basic services.
- Additional services fees – Extra services such as premium meal plans or entertainment.
From July 2025, the new aged care funding model will introduce:
- A means-tested ‘Hotelling Supplement Contribution’ (up to $11.24 per day).
- A ‘Non-Clinical Care Contribution’ fee, replacing the current Means Tested Care Fee (up to $101.16 per day, capped at four years or $130,000).
- The Additional Services Fee and Extra Services Fee will be replaced with a new ‘Higher Everyday Living Fee’.
- Aged care providers will retain 2% per year (up to a max 10% over five years) of any Refundable Accommodation Deposit (RAD) paid.
For home care recipients, the government will:
- Expand the number of care levels from four to eight care levels, improving in-home care support.
- Cover 100% of clinical care costs.
- Introduce a ‘use it or lose it’ model, requiring quarterly spending of allocated funds.
Home Care vs. Residential Aged Care: What’s Changing?
Many families prefer home care for their parents, allowing them to remain in familiar surroundings. However, under the new rules, self-funded retirees will cover 50% of independence support costs and 80% of everyday living costs. If higher care needs develop, transitioning to residential aged care may become necessary.
For residential care, the family home is often a key financial consideration. If one partner moves into care while the other remains at home, the treatment of the home in aged care assessments can impact costs and Centrelink benefits. Decisions about whether to sell or retain the home need careful financial planning.
Given the waiting lists for high-demand aged care facilities, it’s essential to assess options early to avoid limited choices or higher fees in an emergency.
Planning Ahead: Financial Strategies to Fund Aged Care
Many families are caught off guard by the financial reality of aged care. Taking proactive steps now can help reduce the financial burden, maximise government support, and protect family wealth.
- Develop a financial roadmap – Understand the upfront and ongoing costs, and identify which assets (superannuation, investments, or property) could be used to fund care.
- Consider the family home’s impact on aged care fees – If one member of a couple moves into care, maintaining the home may impact costs differently than selling it.
- Understand Centrelink & aged care entitlements – Structuring finances correctly can maximise eligibility for government subsidies.
- Plan for tax and estate implications – Selling assets to fund care could trigger capital gains tax (CGT) liabilities, and inheritance planning should be reviewed to ensure efficient wealth transfer.
- Understand the July 2025 changes – Those entering care from July 2025 may face higher costs.
By planning ahead, families can make more informed financial decisions and reduce the stress associated with obtaining or moving to Care.
Take Control of the Future
Aged care decisions are one of the biggest financial challenges families face, but with the right planning, they don’t have to be overwhelming. By understanding costs, structuring assets effectively, and exploring government support, families can make informed choices that protect their parents’ well-being and their own financial security.
With significant changes coming in July 2025, now is the time to review options, understand government benefits, and plan for aged care in a way that aligns with your family’s financial future.
If you or a loved one is facing aged care decisions, Stratus Financial Group can guide you through the complexities, ensuring the best possible care while protecting family wealth.
To continue this conversation, please contact Brett Cribb, Steve Nicholas, James Marshall and Debbie French at +61 (0)7 3007 2007, or email info@stratusfinancialgroup.com.au
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Stratus Financial Group and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306. This is general advice only and does not take into account your objectives, financial situation, or needs, so you should consider whether the advice is relevant to your circumstances. Read the relevant Product Disclosure Statements (PDS) before making any financial decisions.