Facing up to Australia’s future aged-care costs

As Australia’s population ages, nine in 10 older Australians applying for aged care receive social welfare payments.

Researchers from Flinders University and the South Australian Health and Medical Research Institute (SAHMRI) have conducted a major new study which examined the financial circumstances, sources of income and homeownership of more than 920,000 older people (average age 82) who applied for aged care between 2010 and 2019.

The study highlights the need for more to be done to measure and maintain adequate, accessible, and stable income support systems for older people as the number of older people grows relative to the working-age population.

The new study found that social welfare payments accounted for between 84% and 91% of income for most older Australians seeking aged care. Only those in the highest income group reported a lower proportion of social welfare payments making up their total income (59%).

In Australia, approximately 1.5 million people currently access government-subsidised aged care services, including at-home care and residential aged care.

The findings from South Australia's Registry of Senior Australians (ROSA) Research Centre are relevant in light of the ongoing Aged Care Reforms including the new Support at Home Program, which introduces means-testing for non-clinical services at home, says lead author Associate Professor Stephanie Harrison, from Flinders University and SAHMRI.

"This study provides a foundation to support further research into how older people’s income, financial security and other circumstances impact when and how people use aged care," says Associate Professor Harrison, Matthew Flinders Associate Professor in Health Services and Epidemiology.

“This is critical to support the development of more targeted and equitable aged care services, and to ensure that all older Australians can access the care they need, when they need it, regardless of their financial circumstances.”

Australia’s retirement income system consists of the Age Pension, compulsory superannuation, and private savings. However, as superannuation was introduced in 1992, towards the end of working age for many older Australians in the study, they missed out on years of superannuation contributions.

"With the majority of non-government income largely confined to those in the highest income group and approximately 60% owning their own home, the findings suggest that many older people may appear asset-rich, but income-poor, with limited regular income despite owning a valuable asset" says Associate Professor Harrison.

"Furthermore, homeownership may not translate into readily available resources to meet care-related costs.”

The ROSA study found that the proportion of aged care applicants reporting non-government income rose from 12% in 2010 to 30% in 2019, but the amounts remained relatively small for most people.

“Ongoing monitoring is needed to understand whether future generations of retirees will have sufficient superannuation and other income to support their needs, including access to aged care,” says Associate Professor Harrison.

The research - 'Socioeconomic profiles of older people entering long-term care: a national evaluation using the Registry of Senior Australians' (2026) by Stephanie L Harrison, Sahar Barmomanesh, Dylan Harries, Gillian E Caughey, Maria Crotty, Craig Whitehead, Megan Corlis, Keith Evans and Maria C Inacio will be published in Public Health Research & Practice (CSIRO Publishing). DOI: 10.1071/PU25145.