Do You Have a Spare Million Dollars for Your Aged Care Bond?

Aged care decisions are rarely just financial. They are emotional, often involve questions of independence, identity and family dynamics. Having conversations and exploring options early can help to avoid making major decisions under pressure in a hospital car park. — Rachel Lane, Principal, Aged Care Gurus

The number that stops families in their tracks

It’s a question most Australians don’t think to ask until the moment they’re standing in a residential aged care facility, paperwork in hand, trying to arrange a room for themselves or a parent on short notice.

How much does it cost?

The answer, for many Sydney families, is staggering. Refundable Accommodation Deposits — known as RADs, and formerly called ‘accommodation bonds’ — are the lump sum paid to secure a room in a residential aged care facility. In Sydney in 2026, RAD prices start at around $332,000 for a shared room and rise to $813,000 or more for premium private facilities, according to data from leading aged care information services. Some high-end Sydney facilities have rooms priced well above $700,000.

And that’s just the accommodation deposit. On top of the RAD, residents pay a Basic Daily Fee (currently $66.80 per day, or around $24,380 per year), plus a hotelling contribution for meals, laundry, and daily living, plus a means-tested Non-Clinical Care Contribution that can add significantly more for those with assets above certain thresholds. Total aged care costs for a Sydney resident can range from $350,000 to $550,000 over a residency period, according to financial planning specialists.

The question isn’t whether you can afford to think about this. The question is whether you can afford not to.

Australia’s aged care system has just changed significantly

From 1 November 2025, Australia’s aged care system began operating under the new Aged Care Act — the most significant reform in nearly three decades, according to aged care specialists at Australian Carers Guide. The changes affect how nearly every fee is calculated, and families navigating the system for the first time face a genuinely complex landscape.

One notable change: RADs paid from 1 November 2025 onwards are no longer fully refundable. Under the new rules, aged care facilities retain 2% of the RAD balance per year, for up to five years. That means if a resident pays a $700,000 RAD and remains in care for five years, $70,000 will be retained by the facility when they leave — a significant sum that many families don’t anticipate.

The daily accommodation payment (DAP) option — for those who prefer not to pay a lump sum upfront — is currently calculated using a Maximum Permissible Interest Rate (MPIR) of 7.96% as of April 2026. For a room priced at $500,000, that translates to a daily payment of approximately $109.04, or around $39,800 per year. The Government’s My Aged Care website provides a useful starting point for understanding options, but independent financial advice is essential.

The new system also replaces the former Means-Tested Care Fee with a Non-Clinical Care Contribution (NCCC), subject to a lifetime cap of $135,319. Services Australia conducts a financial assessment to determine how much each resident pays — and the family home is a central part of that calculation.

The family home: your biggest asset, and your biggest decision

For most Australian retirees, the family home represents the single largest component of their wealth. In Sydney, where median dwelling values sit at $1,282,020 as of mid-2026 (Cotality), that home is often the very asset that would fund the RAD.

But selling the family home to fund aged care is not always the right move — and it’s a decision that requires careful thought well before the moment of need arrives. Under the social security means test, the principal residence is generally exempt from asset assessment while it remains the family home. Once sold, the proceeds become assessable assets and may affect Age Pension entitlements.

Aged care financial specialist Rachel Lane, co-author of Downsizing Made Simple and a regular contributor to the Sydney Morning Herald and The Age, is direct on the subject: “There are lots of myths about how you should pay for aged care. A common one is that the government or the aged care home will force you to sell your home to pay the RAD. It’s not true — and it’s a strategy that could cost you tens of thousands of dollars a year in lost pension and increased aged care costs.”

The smartest approach, Lane and other specialists consistently advise, is to understand your options two to five years before you or a loved one might need residential care — not in the middle of a family health crisis.

The case for downsizing now

For many Sydney retirees, the answer to the aged care funding question starts not with a crisis but with a considered choice made years earlier: downsizing.

Downsizing from a large family home to a smaller apartment, townhouse, or retirement village unit can free up substantial capital — capital that can be invested, used to support quality of life in retirement, or held as a buffer for future aged care costs. In Sydney’s current market, where well-presented properties in established suburbs still command strong prices despite the broader softening, downsizing now can make excellent financial sense.

The financial benefits can be significant. The family home downsizing contribution rules allow Australians over 55 who sell a home they’ve lived in for at least 10 years to contribute up to $300,000 (per person, $600,000 per couple) from the sale proceeds into superannuation as a non-concessional contribution — above the standard annual caps. Combined with careful financial planning, a well-timed downsizing can meaningfully improve your retirement position.

Beyond the financial case, there is a practical one. Downsizing to a property that better suits your stage of life — single-level, lower maintenance, closer to services and family — often improves quality of life and reduces the risk of early care dependency. It also creates a ‘what if’ fund: a financial cushion that means a health event or sudden care need doesn’t require emergency financial decisions under pressure.

The best advice? Don’t wait until crisis hits. Understanding your options early and getting help from a financial adviser who knows aged care can make all the difference between stress and peace of mind. — Rachel Lane, Principal, Aged Care Gurus, writing in Australian Carers Guide

The practical step nobody plans for: the home clearance

Whether the decision is to downsize now or to prepare a family home for sale after a loved one moves into care, there is one step that almost every family underestimates: clearing the home.

A lifetime in a family home accumulates decades of furniture, belongings, sentimental items, and practical goods. Managing that process — sorting what to keep, what to donate, what to sell, and what to responsibly dispose of — is physically demanding, emotionally complex, and time-consuming. For families already managing the stress of a health transition or estate administration, it can be genuinely overwhelming.

A professional home clearance team takes that burden off a family’s shoulders. At Crackers Clearout, we’ve worked with hundreds of Sydney families navigating exactly this moment — helping them clear and prepare properties for downsizing sales, settling estates, and supporting loved ones’ transitions into aged care. We handle the heavy lifting with care and discretion, donating and recycling wherever possible, and leaving the property clean and ready for its next chapter.

For families planning a downsizing move, early engagement with a clearance team means the process can happen on your schedule — without the pressure of a looming settlement date. For families managing a deceased estate or urgent aged care transition, having a trusted team to call makes an already difficult time just a little more manageable.

What to do now — a practical starting point

• Talk to an aged care financial specialist. Not a general financial planner — a specialist who understands the interaction between RADs, means testing, the Age Pension, and estate planning. The Government’s My Aged Care website (myagedcare.gov.au) is a useful starting point.

• Consider downsizing proactively. If you’re in a large family home that no longer fits your daily life, explore what downsizing could mean for your financial position and lifestyle. Talk to a trusted real estate agent about what your property could achieve in the current market.

• Start the conversation early. Aged care decisions made in a crisis are almost always harder and more costly than those made with time to plan. Involve family members in the conversation while everyone is well and thinking clearly.

• Plan the property transition. Whether downsizing or eventually selling a family home, factor in the time and cost of a professional clearance. A well-prepared, well-presented property sells better — and a properly managed clearance means the sentimental items are treated with the care they deserve.

The bottom line, when it comes to aged care in Sydney

Residential aged care in Sydney is genuinely expensive — and under the new Aged Care Act, the system is more complex than it has ever been. RADs that can reach $813,000 or more, daily fees, means-tested contributions, and the new 2% RAD retention all add up to a financial picture that deserves serious, early attention.

The good news is that Australians who plan ahead have real options. Downsizing at the right time, understanding the means-testing rules, and building a financial cushion for future care costs can make an enormous difference to both the quality of care available and the financial outcomes for the whole family.

The family home is often the key to it all. And the best time to think clearly about what to do with it is before the moment of need arrives.

Crackers Clearout specialises in downsizing clearances, pre-sale home preparation, and deceased estate clearances across Greater Sydney. We work with families at every stage of the journey — with care, respect, and upfront pricing. Call 1300 257 688 or visit crackersclearout.com.au.