Money

Six months in, my brother and I sat down at a kitchen table with a spreadsheet and a calculator and worked out for the first time what Mum actually had, what it cost to keep her where she was, and what it would cost to move her. The number that came out of the bottom of the spreadsheet was both bigger and smaller than I'd expected. Bigger, because aged care is expensive. Smaller, because the system carries more of it than I'd realised.

Most men come into the money side of caring for a parent with a vague dread and no numbers. The dread shrinks the moment you have the numbers. This module is the numbers.

The Age Pension, plainly

The federal government pension is means-tested on two parameters: assets and income. The lower of the two tests applies. Both have a sliding scale rather than a hard cliff.

As of 2026 (figures index twice a year, March and September; check current rates):

• Single, full pension: around $1,150 a fortnight, plus supplements. Around $30,000 a year.
• Couple combined, full pension: around $1,725 a fortnight. Around $45,000 a year combined.

The full pension cuts down as assets or income rise. It cuts to zero at the upper threshold. Where those thresholds sit:

• Assets test, single homeowner: full pension up to about $314,000 in assessable assets. Cuts to zero at around $695,000.
• Assets test, single non-homeowner: full pension up to about $566,000. Cuts to zero at around $947,000. (Higher because they have to find rent.)
• Assets test, couple homeowners: full pension up to about $470,000 combined. Cuts to zero at around $1,045,000.

The family home is exempt from the assets test for as long as a parent (or spouse) lives there. The car, contents, jewellery are assessed at second-hand value, not insured value, which most families overstate. Superannuation in pension phase is assessed.

Why this matters for caring decisions

Two reasons.

First, the pension is more generous than most middle-class men assume. A widow with a paid-off home and $200,000 in super might be on close to a full pension and not realise it. If she's not claiming, that's $30,000 a year on the table. Check, even if you assume not.

Second, structural decisions you make to "help" can cost the pension. The classic mistake: kids putting their money into Mum's house "to help with renovations", or Mum giving an early inheritance to one of you. Centrelink has a five-year look-back on gifts ($10,000 per year, $30,000 over five years, beyond that the gift is still assessed as if Mum still has it). Your generosity, badly timed, costs her pension.

If you're going to do anything financially clever, do it with a Centrelink Financial Information Service (FIS) appointment first. Free. Government-run. Independent. Book at servicesaustralia.gov.au.

The family home, the big asset

For most Australian parents, the family home is two-thirds of their net worth. The decisions you make about it matter more than anything else in this module.

Three frames:

1. While they live in it: exempt from the assets test. Pension calculation ignores it. They keep the pension, they keep the house. This is why "downsizing for the pension" rarely improves the financial picture.

2. If they go into residential care: the home is exempt for the first two years if a "protected person" (spouse, dependent, certain carers) still lives there. After two years, it counts toward the means-tested care fee, partially. The rules on this changed in 2024 and again in 2025; a current adviser is worth the fee.

3. If they sell it while alive: the proceeds are assessable. The pension can drop or disappear overnight unless the money goes into another exempt vehicle (granny flat agreement, certain annuities, certain RAD payments). Selling the family home before you've understood the asset implications is the most expensive own-goal in this whole area.

Sale-and-loan-back, granny flat, and family arrangements

Three structures families use to keep parents close while managing money. Each has tax and pension implications.

Sale-and-loan-back. Mum sells the family home to one of the kids at fair market value. The kid pays partly in cash, partly with a private loan back to Mum. Mum stays living there. Sounds simple. Reality:

• Stamp duty on the sale, paid by the kid. Tens of thousands.
• Capital gains tax may apply on the sale, depending on whether the home was Mum's main residence (usually exempt under the main residence exemption, but check).
• The loan is assessable for pension purposes (Mum's debt to her son is her son's asset and Mum's loan; the maths gets technical).
• If the kid divorces in five years, the house is part of the property pool.

Sale-and-loan-back can work. Don't do it without a solicitor and an accountant.

Granny flat agreement. A formal arrangement where a parent gifts money or property to a family member in exchange for the right to live in a granny flat (or self-contained part of the family home) for life. The ATO has a specific regime for this. If structured properly:

• The gift is not assessed for the pension under normal gifting rules (granny flat exemption applies).
• The arrangement provides legal certainty about Mum's right to live there.
• It can be tax-effective for the family.

Improperly structured, it's a gift, plain. Family relationships and pensions destroyed by handshake granny flat deals are common. Do this on paper, with proper advice. Around $1,500-$3,000 in legal fees, well spent.

The reverse mortgage / equity release. Mum borrows against the home, takes income, the loan accumulates, the house is sold to repay it on death. Government's Home Equity Access Scheme is the cheapest version (currently 3.95% interest) and works for many parents. Private reverse mortgages from banks run 7-9% and compound. The maths gets brutal at the second rate. Use the government scheme if it covers the need.

The Refundable Accommodation Deposit

The big number in residential care.

A RAD is a lump sum (typically $300,000 to $700,000, sometimes more, occasionally less) that secures a place at a residential aged care facility. It is fully refundable when the resident leaves or dies. The facility uses it for capital expenditure during the stay.

Three ways to pay:

• Pay the full RAD as a lump sum. Best if your parent has the cash from a house sale.
• Pay nothing, pay a Daily Accommodation Payment (DAP) instead. A daily fee equivalent to interest on the RAD at the government-set rate (currently around 8% per year). On a $500,000 RAD, that's about $110/day.
• Combine. Pay part as RAD, part as DAP.

Which is right depends on:

• Whether your parent has the cash without selling the family home.
• Whether selling the home pushes them off the pension (usually yes).
• Whether the spouse remains in the home (yes = RAD might come from elsewhere).
• The expected length of stay (longer stay = RAD is better, shorter = DAP).
• The interest rate environment (higher = RAD better, lower = DAP better).

This is where the Centrelink Financial Information Service appointment matters most. Free, government-run, independent. They will model both scenarios for you. Book it before you sign anything.

Daily care fees

In residential care, four fees stack:

1. Basic daily fee. 85% of the single Age Pension. Around $63/day. Everyone pays this.
2. Means-tested care fee. Up to about $100/day, capped annually (~$33,000 a year) and over a lifetime (~$80,000). Calculated by Centrelink based on assets and income.
3. Accommodation contribution or RAD/DAP. Depends on means.
4. Additional services fee. Optional. Single rooms with a view, premium meals, gym access. Often $30-$60/day. Negotiable, sometimes refundable.

Total daily cost: $150-$350 a day for a typical resident, plus the RAD if applicable. $55,000-$130,000 a year. Most of which is covered by some combination of the pension, means-tested government subsidy, and the resident's own money.

How siblings split costs

This is the conversation most families avoid until it's painful. Have it early.

Three principles that work for most families:

• Care from cash flow. Day-to-day costs (top-ups, taxis, podiatrist, special equipment) come from Mum's pension first. Any shortfall is shared by siblings, in proportion to ability, not equally. The sibling on $80k a year and the sibling on $250k a year don't both pay the same $50/week.
• Capital from the estate. Things that can wait or that increase the value of the estate (home modifications, RAD top-ups using inheritance) come from the estate eventually. Track who paid what; reconcile in the will or in a side agreement.
• Time has a money value. The local sibling doing 8 hours of unpaid labour a week is contributing roughly $20,000 a year of carer's-rate-equivalent. This counts. The sibling who lives interstate and contributes only money does not get to call the shots equally with the one carrying the load.

Write the agreement, even informally. A two-page document signed by all siblings, kept by Mum's solicitor. Saves two thousand legal arguments later.

The money side of caring for a parent has more government in it than most men expect. The mistake is not asking. The free Centrelink FIS, the My Aged Care assessment, the pension entitlement: all carry more weight than the family imagines on day one.

Get the numbers. Get the advice. Spread the load honestly.

Further watching

• Understanding Aged Care fees in Australia
• Age Pension Assets Test - EXPLAINED IN PLAIN ENGLISH!