A Year in Aged Care Costs More Than Two Years of the Full Age Pension

A year in care, counted in pension years

The full single Age Pension is $1,237.70 a fortnight from 20 September 2026, including the pension and energy supplements, Services Australia says. That is about $32,180 a year. On Going Rate's typical figures, a year in an aged care home ($72,000) costs more than two years of it. A couple on the full pension receive $1,866 a fortnight between them, and the same year in care costs about one and a half years of their combined payment.

Most residents stay longer than a year. AIHW reports that people who left permanent residential care in 2024-25 had stayed a median of 20.1 months, so about half stayed longer. At Going Rate's typical yearly price, that stay costs almost four years of the full single Age Pension. People whose stay ended with their death had a median of 22 months, and women stay about eight months longer than men, AIHW says.

Care usually comes late. AIHW puts the median age on entering permanent residential care at 85 and the median age on leaving at 88, and 86% of people leave because they die. The pension and the basic aged care fee are both indexed on 20 March and 20 September. The basic fee is pegged to the pension, so the two move together.

Who pays the typical price

Aged care fees are means-tested, so residents with savings or a house pay more than the minimum. Every resident pays the basic daily fee, which is $68.93 from 20 September 2026, or $25,159.45 a year, My Aged Care says. It is set at 85% of the basic single Age Pension and takes about 78% of the full pension once supplements are counted.

A full pensioner with few assets pays roughly that basic fee and little else, which puts them near the bottom of Going Rate's price range for a year in an aged care home. The Health Department's fee schedule sets the asset-free area at $66,500 and the income-free area at $36,454.60. Residents below both pay no accommodation contribution, and the government covers their room. A resident who pays any part of their room by refundable deposit must be left with at least $66,500.

Residents with more means pay more on top. The Aged Care Act 2024 began on 1 November 2025. Under it, these residents can be asked for a hotelling contribution of up to $22.15 a day and a non-clinical care contribution of up to $109.45 a day, plus a payment for their room. People who were already in care before 1 November 2025 stay on the older fee rules unless they opt in.

The room price is a deposit

A home quotes its room price as a refundable accommodation deposit (RAD). A RAD is a lump sum the resident lodges with the home and gets back when they leave. For people entering care from 1 November 2025, the home keeps 2% of it a year for up to five years, or 10% at most, My Aged Care says. The rest goes back to the resident or their estate.

Residents can pay a daily accommodation payment instead, or mix the two. To get the daily payment, multiply the room price by the maximum permissible interest rate of 8.51% and divide by 365. Without approval from the pricing authority, a home can charge a room price of up to $789,686, the Health Department says. At that price the daily payment is about $184.

The care bill is much smaller than the deposit. At Going Rate's typical price for a year in care ($72,000), AIHW's 20.1-month median stay costs under a sixth of that $789,686 maximum. Consultancy Mirus Australia put the average room price at more than $600,000 in May 2026, The Weekly SOURCE reported, and the median stay costs about a fifth of that.

Why the care cap rarely bites

The non-clinical care contribution has a lifetime cap of $140,652.80 from 20 September 2026. It also stops after four years of payments, the Health Department's fee schedule shows.

At the maximum rate of $109.45 a day, a resident takes about three and a half years to reach the cap. Over a 20.1-month median stay, the most anyone pays in care contributions is about $67,000, less than half the cap. The cap is indexed each March and September, so older guides quote lower figures.

Staying home for longer

Support at Home replaced Home Care Packages on 1 November 2025. Personal care such as showering and dressing has been fully funded since 1 October 2026, and full pensioners pay 5% for independence services and 17.5% for everyday living help, My Aged Care says. Self-funded retirees without a Commonwealth Seniors Health Card pay 50% and 80%. At 30 June 2025, about 293,000 people had a Home Care Package and 196,000 lived in permanent residential care, AIHW reports.

The Health Department's program data report counted 100,191 people waiting for an ongoing Support at Home place at 31 March 2026. At standard priority, the estimated wait was more than half a year.

The Support at Home assistive technology and home modifications scheme funds up to $15,390 over 12 months at its high tier, and it lists stairlifts as a home modification. A stairlift ($11,000) costs about seven-tenths of that cap, and a year in an aged care home costs about six and a half stairlifts. Residential respite gives carers a break. The resident pays the same $68.93 basic daily fee and no means-tested fees, and the median respite stay is 25 days, AIHW says. On Going Rate's figures, a respite stay ($3,050) costs under a twentieth of a year in an aged care home.

Retirement villages often end in care

The 2025 PwC and Retirement Living Council census found that 37% of people leaving a retirement village move into aged care. Residents enter at an average age of 76 and stay in an independent living unit for an average of 8.8 years.

The village exit fee shapes what is left for a room deposit. The census found an average maximum deferred management fee of 33% and an average monthly service fee of $645 for a two-bedroom unit. In Victoria, non-owner residents on contracts signed from 1 May 2026 must get their exit entitlement within 12 months of leaving, Consumer Affairs Victoria says. Western Australia set the same 12-month limit from 1 September 2026. Eligible WA residents can also ask for part of the entitlement to go toward aged care daily accommodation payments.

Most retirees die with what they saved

Treasury's Retirement Income Review found that most people die with the bulk of the wealth they had at retirement intact. Members of one large super fund who died had left 90% of their retirement balance untouched. The review listed concern about future health and aged care costs among the reasons retirees hold back. At Going Rate's typical price, the care bill for a median stay is under a sixth of the maximum room deposit.

Under the ASFA Retirement Standard, a comfortable retirement for a single homeowner aged 65 to 84 cost about $56,000 a year in the June quarter of 2026, The Motley Fool reported. A year in an aged care home ($72,000) costs more than that. ASFA says a single homeowner retiring at 67 needs about $630,000 in super for that lifestyle, and at Going Rate's typical price the median stay costs under a fifth of it.

An adviser can model whether a deposit or a daily payment works better against the pension assets test. Under that test, a single homeowner loses the full pension above $333,000 in assets, Services Australia says. Going Rate's typical financial adviser fee ($3,250) is under a twentieth of a year in care. ASIC's Moneysmart uses $3,500 for a statement of advice in its worked example. Retirees who run their own fund also pay for an SMSF audit ($1,150) every year, and 74% of the 1,246,552 SMSF members are aged 50 or over, the ATO says.

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