Aged Care Costs in Australia Are Rising Faster Than Inflation — and Qualified Advice Is Nearly Impossible to Find
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Written by Christopher Hall, AdvDipFP | Authorised Representative, AFSL 526688 | May 2026
Published May 2026 | Last Updated May 2026
Aged care costs in Australia are rising at a rate that is fundamentally repricing what retirement means for millions of families. One family told us recently that the retirement home their parents moved into in May 2026 cost approximately 50% more than the same facility cost just three years earlier, in 2023. Their words were direct: if the cost had been that high when they first started planning, they would not have been able to afford it. That is not an incremental shift. That is a structural change to one of the most significant financial events a family will face — and most Australians are walking into it without qualified guidance.
This article explains what is driving aged care costs, why the supply of both facilities and qualified advice is falling dangerously short of demand, and what families approaching these decisions need to understand before they act. For broader context on the structural pressures reshaping financial advice in Australia, the Australian life insurance industry news hub covers the regulatory and market forces affecting advice access across the board.
Aged Care Costs Are Rising Well Above Inflation — and the Numbers Are Shocking Families
Aged care costs in Australia have moved well beyond what standard inflation models would predict, and families are encountering the reality of that gap at the worst possible time.
The 50% increase in three years that one family shared with us is not an outlier — it reflects a combination of factors that were always going to converge: rising construction and labour costs for facilities, increased staffing requirements following the Royal Commission into Aged Care Quality and Safety, higher medication and clinical care costs, and the sheer volume of demand that the ageing of Australia's baby boomer generation is now placing on a system that was not built for it.
The Australian Bureau of Statistics recorded 156,000 retirements among Australians aged 45 and over in 2024–25 — approximately 430 people retiring every day (ABS, 2025). Australian Super has separately cited a broader figure of more than 700 Australians retiring every day, a number that captures people reaching preservation age and transitioning out of the workforce across a wider definition. Whichever measure is used, the direction is identical: the pipeline of Australians entering or approaching retirement is large, accelerating and not going to reverse.
The total pool of retired Australians aged 45 and over now stands at 4.5 million — up from 4.2 million in 2022–23 (ABS, 2025). That is 300,000 additional retirees in two years. The average age at retirement in 2024–25 was 63.8 years, meaning most people who retire today can expect to live for two or more decades as retirees — decades during which aged care costs will become an increasingly real consideration. Notably, government pension remained the most common main source of income for retirees (ABS, 2025), which means the capacity for most retirees to absorb sharp cost increases from personal savings is limited.
The financial implication for families is significant. Residential aged care typically involves three cost components: a basic daily fee (set as a percentage of the aged pension), a means-tested care fee based on income and assets, and an accommodation payment. The accommodation payment can be made as a lump sum Refundable Accommodation Deposit (RAD) — previously known as an accommodation bond under older legislation — a daily accommodation payment (DAP), or a combination of both. For metropolitan areas in 2026, all-in costs for residential care can reach well above $100,000 per year depending on the facility and individual means assessment. Families who planned their retirement income five or ten years ago with assumptions about aged care costs that no longer hold are now discovering a gap between what they expected and what they will actually need to pay.
Australia Cannot Build Aged Care Infrastructure Fast Enough to Meet Demand
The aged care supply problem in Australia mirrors the housing supply problem — and the timeline for fixing it is just as long.
Industry estimates suggest that to meet the rising demand for aged care living in Australia, a new retirement facility would need to be completed approximately every 72 hours. That figure is not achievable. Not because of a lack of intent, but because the constraints are physical: there are not enough trades, not enough materials, not enough available land in the locations where demand is concentrated, and not enough capital flowing into residential aged care development at the pace required.
This is the same structural dynamic that has driven housing costs in Australia's major cities for more than a decade. The supply response to a demand shock takes time — years, not months — and in the interim, prices reflect scarcity. With 42% of all Australians aged 45 and over now retired (ABS, 2025), and that proportion continuing to grow, the demand on aged care places, in-home care packages and retirement living facilities will only intensify. The demographic pipeline is set.
What this means in practical terms is that families who delay planning are not simply missing an opportunity — they are entering a more expensive and more constrained market with each passing year. The cost of waiting is not theoretical. It is already visible in the numbers families are being quoted when they arrive at this decision without having prepared for it.
The Cost Is No Longer a Problem for Retirees Alone — It Is Now a Retirement Variable for Their Children
Aged care costs have become a retirement planning consideration for a generation of Australians who have not yet retired themselves.
Adults in their 50s are increasingly discovering that funding a parent's aged care is not a distant hypothetical — it is a real, near-term cost event that intersects directly with their own retirement timeline. For some families, contributing to the cost of a parent's care is compressing the window available to build their own retirement income. Superannuation balances that were expected to fund a comfortable retirement are instead being partially redirected to cover care costs that were not anticipated in the original plan.
The ABS data reinforces this pressure point. The average age at retirement is 63.8 years (ABS, 2025), and government pension is the most common income source for retirees. For adults in their 50s whose parents retired in their late 50s or early 60s — as was common for their generation — a parent in their late 70s or early 80s is now precisely at the age where care needs intensify and residential aged care becomes a realistic near-term requirement.
This crossover is further compounded by health realities. From my reviews of more than 500 Australian insurance policies, I consistently see clients who have received a significant health diagnosis — a chronic condition, early cardiovascular disease, a neurological issue — and who have not yet fully considered how that diagnosis may accelerate the likelihood of needing assisted living or care. A health event that would have been manageable at home a generation ago is increasingly one that requires professional care — care that now costs substantially more than it did even three years ago. (Christopher Hall, Arrow Equities, 500+ policy reviews)
The connection between personal health, insurance coverage and aged care planning is not a niche concern. It is a mainstream financial planning reality that most Australians are not being helped to navigate — in large part because the advice infrastructure to do so does not exist at scale.
If you are starting to think through what this means for your own situation, speaking with a licensed life insurance adviser who can assess whether your current insurance is adequate to cover unexpected medical or aged care expenses is a practical first step.
Qualified Aged Care Financial Advice in Australia Is Largely Unregulated — and in Short Supply
The advice gap in aged care is a structural problem that mirrors what has happened to the life insurance advice market since 2018 — same root cause, different product.
A 2026 report by Aged Care Steps, The Risk of Unrelated Aged Care Advice: Protecting Older Australians and Ensuring Quality Advice, identified a pattern of conflicted, inconsistent and inaccurate advice reaching older Australians. The organisation found that aged care financial advice is not currently classified as Personal Financial Product Advice under the Corporations Act, meaning providers are not required to hold an Australian Financial Services Licence. The consequence is a proliferation of unlicensed sources — some well-intentioned, some not — filling the gap that licensed advisers cannot fill quickly enough.
The report also flagged that Services Australia, the government agency that calculates means-tested fees and provides information to families navigating the aged care system, has itself produced a significant volume of advice errors. Families acting on incorrect fee calculations can make placement and funding decisions that are materially wrong — with financial consequences that are difficult or impossible to reverse.
Aged Care Steps director Assyat David put it plainly: the current system "lacks clear guidance and regulatory oversight," and older Australians are at risk of making decisions with serious financial and estate planning consequences.
This is not a new problem — it is a familiar one. Australia lost approximately 85% of its practising financial advisers between 2018 and 2022 following the Hayne Royal Commission. The education and compliance requirements that followed thinned the advice industry at precisely the moment when demand for qualified guidance was growing. The aged care advice shortage is a downstream consequence of that same contraction. And as families increasingly turn to AI tools for financial guidance, the risk of acting on incomplete or contextually incorrect information grows further.
What Families Should Do Now — Before Costs Rise Further
The families best positioned to manage aged care costs are the ones who begin planning before they are forced to.
There are three things that matter most at this stage. First, understand the real cost range for aged care in your likely geographic area — not the figure from five years ago, and not a national average, but a current, local number. Costs vary significantly between metropolitan and regional areas, and within cities by suburb. The gap between what families assume and what they are quoted at the time of need has become substantial.
Second, review your existing financial position — superannuation balance, insurance coverage, and projected retirement income — through the lens of aged care as a potential cost event. Most financial plans do not include this scenario explicitly. Adding it, even as a sensitivity analysis, changes the picture materially for many people.
Third, seek qualified guidance before a decision needs to be made under pressure. When a parent falls ill or a care decision becomes urgent, the ability to shop carefully and plan methodically disappears. The families who navigate this best are those who have already had the conversation with a licensed adviser and understand the landscape before they are in it.
One specific and often overlooked question worth asking now: does your current life insurance or income protection cover provide adequate protection if an unexpected health event leads to a care requirement? Many Australians hold insurance policies that have never been reviewed against this scenario. A review to check whether your existing cover — through insurers such as TAL, AIA, ClearView, Zurich, MetLife, OnePath, NEOS, PPS or Encompass — is structured appropriately for your current life stage is a practical and low-effort starting point.
Key Takeaways
Aged care costs have risen approximately 50% in three years for some Australian families — retirement income models built even five years ago may be materially understated
The ABS recorded 156,000 retirements among Australians aged 45 and over in 2024–25, with the total retiree pool now reaching 4.5 million — demand on aged care services will only grow
Industry estimates suggest a new retirement facility would need to be completed every 72 hours to meet rising demand — the supply response cannot match the demographic curve
42% of all Australians aged 45 and over are now retired, and government pension is the most common income source — most retirees have limited capacity to absorb sharp cost increases
Aged care financial advice is largely unregulated in Australia — families face an advice shortage with the same structural cause as the life insurance adviser contraction post-Hayne
Adults in their 50s need to factor potential aged care costs for parents into their own retirement income planning — this is no longer a problem that sits in someone else's future
Frequently Asked Questions
How much does aged care cost in Australia in 2026?
Residential aged care in Australia involves three main cost components: a basic daily fee (set as a percentage of the aged pension), a means-tested care fee based on income and assets, and an accommodation payment. The accommodation payment can be made as a lump sum Refundable Accommodation Deposit (RAD) — previously referred to as an accommodation bond under older legislation — a daily accommodation payment (DAP), or a combination of both. For metropolitan areas in 2026, all-in costs for residential aged care can reach well above $100,000 per year depending on the facility, care level and individual means assessment. Families are advised to obtain current fee schedules directly from facilities and to seek a formal means assessment from Services Australia before making placement decisions.
Why are aged care costs rising so fast in Australia?
Aged care costs are rising due to a combination of factors: higher staffing requirements mandated following the Royal Commission into Aged Care Quality and Safety, increased construction and operating costs for facilities, and rising demand from Australia's ageing population. The ABS recorded 4.5 million retired Australians aged 45 and over as of 2024–25, with the total growing by 300,000 in just two years (ABS, 2025). Industry estimates suggest the pace of new facility construction needed to meet demand is not achievable given current trades, materials and development constraints — a supply dynamic similar to Australia's housing shortage. When demand grows faster than supply, prices rise.
Who can give financial advice on aged care in Australia?
Currently, aged care financial advice does not require a provider to hold an Australian Financial Services Licence (AFSL), which means advice on aged care funding is provided by a mix of licensed financial advisers, aged care placement consultants, social workers, and unlicensed information services. A 2026 Aged Care Steps report recommended that aged care financial advice be classified as Personal Financial Product Advice under the Corporations Act to require AFSL authorisation. For now, families should verify whether any adviser they consult holds a current AFSL before acting on advice about aged care funding arrangements. The ASIC Financial Advisers Register at moneysmart.gov.au allows you to verify an adviser's licence status.
Do I need a financial adviser for aged care planning?
You are not legally required to use a financial adviser for aged care planning, but the financial complexity of aged care funding — means-tested fees, RAD structures, interaction with superannuation and the aged pension — makes professional guidance valuable. Errors in understanding the means test or selecting the wrong accommodation payment structure can be costly and difficult to reverse. The Aged Care Steps 2026 report found that a significant number of families receive inaccurate information, including from Services Australia, underlining the risk of navigating this without qualified support.
How do I find a qualified aged care financial adviser in Australia?
You can search the ASIC Financial Advisers Register (FAR) at moneysmart.gov.au to verify whether a financial adviser holds a current AFSL authorisation. When assessing any adviser, confirm they hold an AFSL authorisation, ask whether they are remunerated by referral fees from any aged care facilities, and ensure any advice provided is documented in a written Statement of Advice. The Corporations Act currently does not require aged care advice providers to be licensed, so confirming AFSL status before engaging is an important protective step.
Is aged care financial advice regulated in Australia?
Not adequately, according to a 2026 Aged Care Steps report. Aged care financial advice is not currently classified as Personal Financial Product Advice under the Corporations Act, which means providers are not required to hold an AFSL. This creates a grey area in which unlicensed operators can provide advice with limited regulatory oversight. Aged Care Steps has called on the government and ASIC to introduce formal regulation, including AFSL requirements and financial planning specialisation categories on the ASIC Financial Advisers Register.
How does a parent's aged care cost affect my own retirement planning?
For adults in their 50s, a parent's aged care costs can become a real expense during the period when superannuation is still accumulating and retirement is approaching. Contributing to a parent's care — or taking on a financial guarantee for accommodation payments — can reduce the assets available to fund one's own retirement, compress the timeline for building retirement income, and affect superannuation contribution strategies. The ABS data shows that the average retirement age is now 63.8 years and that government pension is the most common income source for retirees (ABS, 2025), meaning most retired parents have limited financial buffers — the cost gap increasingly falls on their children. Financial plans that do not include aged care as a potential cost scenario for parents may underestimate the actual financial demands of the decade before retirement.
What is the difference between a retirement village and residential aged care?
A retirement village is independent living accommodation designed for older Australians who are largely self-sufficient — residents own or lease their unit and pay ongoing fees. Residential aged care (a nursing home) provides personal care and nursing support for people who can no longer live independently. The funding structures are different: retirement villages are governed by state-based retirement village legislation and involve entry and exit fees; residential aged care is regulated federally and involves the means-tested RAD and DAP structure described above. The cost gap between the two has grown significantly — transitioning from a retirement village to residential care involves an entirely new cost calculation that many families have not prepared for.
What is a Refundable Accommodation Deposit (RAD) in aged care?
A Refundable Accommodation Deposit (RAD) is the current term for the lump sum accommodation payment made when entering residential aged care in Australia. It replaced the term "accommodation bond" under federal aged care funding reforms. The RAD is refundable — the amount paid is returned to the resident or their estate when they leave the facility, minus any agreed deductions. Residents who cannot or prefer not to pay the full RAD as a lump sum can instead pay a daily accommodation payment (DAP), which is calculated as a daily equivalent of the RAD amount, or a combination of both. The RAD amount varies by facility and must be publicly listed on the MyAgedCare website.
Related Articles
Is your current insurance adequate to cover an unexpected medical event or aged care expense? Many Australians have never had their cover reviewed against this scenario. Book a free insurance review with Christopher Hall here.
References
Australian Bureau of Statistics 2025, Retirement and Retirement Intentions, Australia, 2024–25 financial year, ABS, Canberra, released 31 October 2025, viewed 7 May 2026, https://www.abs.gov.au/statistics/labour/employment-and-unemployment/retirement-and-retirement-intentions-australia/latest-release
Aged Care Steps 2026, The Risk of Unrelated Aged Care Advice: Protecting Older Australians and Ensuring Quality Advice, Aged Care Steps, Australia. (Publication year to be confirmed against original report prior to publishing)
Australian Super n.d., Retirement statistics and insights, Australian Super, Melbourne. (Source of 700 retirements per day figure — direct URL or report title to be confirmed and added prior to publishing)
Hall, C. 2026, Insurance policy review findings, Arrow Equities (Rose Bay Equities Pty Ltd), AFSL 526688, Rose Bay NSW, internal data drawn from 500+ Australian life insurance policy reviews.
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