A surge in aged-care costs is prompting many older Australians to reconsider the timing of wealth transfers to their children, as they face the risk of exhausting resources needed to cover their own care expenses. Recent data shows that the average price for an aged-care room now stands at approximately $608,000, with costs varying by state—from around $539,450 in Tasmania to $640,365 in New South Wales. In some cases, prices for residential aged-care accommodation deposits reach as high as $3.3 million in New South Wales, $2.8 million in Victoria, and $2.7 million in Western Australia.

These figures come amid a backdrop of changes introduced in late 2025 that have increased the financial burden on wealthier retirees. The cost structure includes refundable accommodation deposits (RADs), one-off lump sums to secure a room, or an alternative daily accommodation payment model that, for a $1 million room, currently amounts to about $84,000 annually. In addition to accommodation fees, residents must pay a basic daily fee—set at 85% of the Age Pension, equating to $24,382 annually—and, depending on means tests, may incur additional charges up to around $47,000 per year for hotel-like services and non-clinical care.

Brendan Ryan, founder of Later Life Advice, described the financial demands as a source of “sticker shock” for many families, noting that older Australians often confront these costs after decades of relatively stable financial circumstances. Ryan attributes rising expenses to the intensive labor involved in care provision, regulatory reforms, increased longevity, and the prevalence of dementia—now Australia’s leading cause of death—which affects over half the residents in permanent aged care.

Home care costs have also escalated following the introduction of the Support at Home system last year, which replaced previous Home Care Packages. The new framework includes eight classification levels, with annual package values ranging from $11,000 to $80,000. A survey by Later Life Advice found median hourly rates of $110 for personal care, $180 for registered nursing, and over $200 for allied health services such as physiotherapy and podiatry. Trilogy Care CEO Luke Traini reported a 38% average increase in home care prices during the first nine months under the new system. He explained that previous management fees are now included in hourly rates, which have roughly doubled compared to the past program.

Experts warn that while gifting wealth early can assist younger generations with housing or expenses, retirees may inadvertently leave themselves financially vulnerable. Traini emphasized the importance of understanding how home care pricing affects the quantity of care and incorporating aged-care costs into broader financial planning. Special considerations arise when one member of a senior couple enters residential care while the other remains at home, as the family home is excluded from asset testing if occupied, limiting its availability to fund care.

Financial strategist Theo Marinis from Caveo Partners suggested options such as downsizing or accessing home equity through the federal government’s Home Equity Access Scheme (formerly the Pension Loan Scheme). This program allows seniors to receive regular payments by tapping into their home equity, with interest rates lower than typical reverse mortgages. Marinis noted that individuals on full pensions can receive an additional 50% on top of their entitlements, helping to cover care costs.

Ryan supports cautious early inheritances, provided they are made with full awareness of aged-care funding requirements and gifting regulations. He cautioned against transferring substantial wealth to children without clear planning, emphasizing the importance of understanding aged-care pathways. The government’s myagedcare.gov.au website remains a key resource for details on fees and services.