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← News · 23 October 2026

What should be considered when planning for later life?

What should be considered when planning for later life?

Synopsis

Why later-life planning needs a wider view

Many retirement conversations start with one question: how much money will be available? That matters, but it is only the starting point. A workable plan also asks where you will live, how you will pay for help if your health changes, whether family members may need support, and who can make decisions if you lose capacity.

The length of later life is uncertain. The Australian Bureau of Statistics reports life expectancy at birth of 81.1 years for males and 85.1 years for females for 2022 to 2024. That is a population average based on current death rates, not a personal prediction, but it shows why a retirement plan cannot assume a short time horizon. Some people will need income for decades, while others may face high costs over a much shorter period because of illness or care needs.

Planning should therefore use scenarios rather than a single forecast. Consider a healthy retirement, a period of reduced work, a major medical expense, a move into supported living, and the possibility that one partner lives much longer than the other. Review the plan when circumstances change, rather than treating it as a document that is finished at retirement.

Retirement income: making money last without losing flexibility

For many Australians, retirement income comes from a mix of superannuation, the Age Pension and personal investments. MoneySmart also identifies account-based pensions, lifetime income streams, leaving money in super, investing outside super and combinations of these choices as possible approaches.

Start with a spending plan. Separate essential costs, such as housing, food, utilities, insurance and medical needs, from discretionary spending, such as travel and gifts. Include irregular costs, such as replacing a car, major home repairs, dental treatment and periods of paid care. A plan that covers only regular monthly bills can look comfortable until one large expense arrives.

The Age Pension is available from 67, subject to residence rules and the income and assets tests. The tests assess a person and their partner together where relevant. The income test can include deemed income from financial assets such as bank accounts, shares and superannuation. The assets test looks at the value of assessable property and possessions, with limits that vary according to circumstances such as homeownership and relationship status.

The assets test treats the principal home differently from financial assets, as long as it remains the person’s principal home. That treatment can make housing a major part of retirement planning. A home may provide security and low ongoing housing costs, yet it may not produce cash flow for day-to-day expenses or care.

Superannuation also changes in importance over time. Before Age Pension age, super is not counted in the income and assets tests if the fund is not paying a super/annuity pension. At Age Pension age, super is counted as an asset and is generally subject to deeming under the income test. Withdrawing money and placing it in a bank account or another investment can therefore change the way it is assessed.

Common income choices involve genuine trade-offs:

Tax and contribution rules add another layer. Before making additional contributions or starting an income stream, the ATO recommends checking the total superannuation balance, contribution caps, access rules, tax on benefits, and the transfer balance cap. Exceeding a cap can lead to extra tax.

A downsizer contribution may be useful for an eligible person aged 55 or older who sells a qualifying home. The ATO says the limit is up to $300,000 per eligible person, subject to conditions including at least 10 years of ownership by the person and/or spouse, the main-residence CGT rules, the one-use rule, a contribution form and a 90-day timing rule unless an extension is granted. The contribution does not count towards concessional or non-concessional caps, but it does form part of the total superannuation balance and can count towards the transfer balance cap if moved into retirement phase.

That rule may be useful, but it is not a reason to sell a home on its own. A contribution may improve the tax or investment position for some people, while increasing assessable super and reducing accessible cash for other purposes. It can also affect income-support payments. Independent advice is sensible before signing a sale contract or contributing the proceeds.

Health, incapacity and aged care

Health planning should include both ordinary medical costs and the possibility of needing help with daily living. Medicare covers many services, but Moneysmart notes that retirees may still pay gaps for doctors and specialists and may face high costs for dental care, glasses, hearing aids and allied health services. As a Medicare cardholder, public hospital treatment can reduce costs, while private insurance may offer more choice but comes with premiums and possible gaps.

Keep a separate health and care reserve in the retirement plan. The amount will depend on health, insurance, family support, and preferences, but the principle is broad: don't invest every dollar on the assumption it will remain untouched until death. A liquid reserve can cover urgent treatment, home modifications, transport, respite, or a short period of extra help.

If you need support at home, the current program is called Support at Home. It began in November 2025 and replaced the Home Care Packages Program and the Short-term Restorative Care Programme. It can fund assessed services, equipment and home modifications, including clinical supports, help with personal activities and everyday living services. Contributions depend on the service and the person’s capacity to pay. The program page says clinical support costs are not subject to contributions. As of 1 October 2026, the government fully funds personal care services.

Residential aged care has a different financial structure. Under the arrangements that apply to most people entering care on or after 1 November 2025, costs can depend on the person’s entry date, income and assets, the provider, and the room price. A means assessment helps determine contributions and the level of government support. Accommodation payment choices can also affect pension and aged-care fees, particularly where a couple has one partner at home and one in care.

The choice usually comes down to staying home with support or moving to a setting with more care available. Staying home may preserve familiarity and community connections, but it may require modifications, family involvement, transport and multiple service providers. Residential care may provide a safer, more coordinated environment when needs become complex, but it can involve a major lifestyle change and a significant financial decision.

Capacity planning belongs in the health section as well as the legal section. AIHW estimates that around 439,000 Australians were living with dementia in 2025, and almost 291,000 were living in the community. Dementia rates rise sharply with age. This does not mean dementia is inevitable, but it does make early planning practical rather than abstract. Discuss who should help with money, what information they will need, and which decisions you want them to make.

An advance care directive records values, care preferences and, depending on the state or territory, a substitute decision-maker. The Australian Government says directives differ between jurisdictions and should be discussed with a doctor. A valid directive requires decision-making capacity when it is made, so it is better to prepare one before a crisis.

Housing: security, cash flow and care access

Housing is both a lifestyle choice and a financial asset. Ask whether the current home will remain suitable if mobility changes, driving becomes difficult, stairs become unsafe or a partner needs support. Location matters as much as size. Being close to public transport, health services, shops and trusted people can reduce the need for paid transport and make informal support easier.

Staying in the current home can preserve stability and avoid the costs of selling and buying. Disadvantages may include maintenance, insurance, rates, energy costs, an unsuitable layout, and money tied up in the property. Home modifications or Support at Home assistance may make staying feasible, but not every home can be adapted economically or safely.

Downsizing can free up money, reduce upkeep, and put a person closer to services. It can also mean selling costs, legal fees, moving costs, stamp duty or other purchase costs, strata or body corporate fees, less room for visitors and the emotional loss of a family home. Moneysmart warns that the amount released depends on the property market and that buying and selling in the same market may leave a smaller difference than expected.

The Age Pension effect deserves careful attention. If sale proceeds are intended for a new principal home, the relevant portion may be exempt from the assets test for up to 24 months for homes sold on or after 1 January 2023. An extension of up to 12 months may be available where the person continues to intend to use the money for the new home, has made reasonable attempts within a reasonable period and has experienced delays beyond their control. The proceeds can still be subject to deeming under the income test during the exemption period.

Model the transaction before selling. A smaller home may create more investable capital, but the extra assets can reduce the Age Pension and increase deemed income. That is not automatically a bad result if the extra capital improves the person’s overall position. It still needs to be measured against selling costs, expected spending and care needs.

Renting can provide flexibility and release housing equity, but it exposes a retiree to ongoing rent and future housing market changes. Retirement villages and land-lease arrangements may offer services or community, but entry, exit and ongoing charges depend on the contract. A solicitor should review the agreement before commitment.

Equity release is another choice. A reverse mortgage can provide cash while the owner stays at home, but interest compounds, the debt grows, and home equity falls. Repayment is generally required when the home is sold, the borrower moves out, or the estate sells the home. Moneysmart specifically recommends considering the effect on Age Pension eligibility, aged-care affordability, future living expenses and what remains for others. The Government’s Home Equity Access Scheme is a different form of borrowing secured against Australian real estate, with accrued interest and a negative-equity guarantee subject to its rules.

Family responsibilities and the risk of informal assumptions

Later-life planning often includes support for adult children, grandchildren, a partner with a disability or an ageing parent. Assistance can take the form of a gift, a loan, a guarantee, accommodation or unpaid care. Each choice affects cash flow and family relationships.

Before providing a large amount, write down what it is intended to be. A gift may be simple, but it can reduce the money available for care and may create expectations among other beneficiaries. A loan may preserve the intention that money will be repaid, but it needs clear terms and a realistic repayment plan. A guarantee can put a home or retirement savings at risk if the borrower cannot pay. These are matters for legal and financial advice, especially where a family business, trust, blended family or vulnerable beneficiary is involved.

Do not assume that children will be able to provide unpaid care. They may live in another city, have health problems, have work responsibilities, or have different views about what care is appropriate. A plan should identify paid care and public support as well as family help. It should also allow for the possibility that the healthy partner becomes the carer and then needs support themselves.

A clear family conversation can prevent confusion later. Discuss the preferred home, likely care options, who can help with decisions and whether the aim is to preserve assets or use them to improve quality of life. Family members may have different objectives, so documenting the person’s wishes matters.

Estate planning and control of decisions

A will explains what should happen to estate assets after death. It does not automatically control superannuation. The super fund’s beneficiary rules and any valid binding nomination matter, so check nominations after marriage, separation, divorce, a beneficiary's death, the birth of children, or a major change in financial circumstances.

An enduring power of attorney covers financial and legal decisions when a person is alive but unable to act. An enduring guardian or medical decision-maker deals with health and lifestyle matters, depending on the jurisdiction. An advance care directive records treatment preferences and values. These documents differ and may have different names across Australia. A solicitor can explain the relevant state or territory rules.

Review the plan when relationships or assets change. Keep a record of bank accounts, super funds, investments, property deeds, insurance, debts, digital accounts and where the original documents are held. Limit access to sensitive passwords and choose decision-makers carefully. Planning for incapacity also reduces the risk that a family member will need to seek a tribunal or court appointment after losing capacity.

For households of average means, priorities often include a valid will, a current super nomination, an enduring power of attorney, an advance care plan, and enough liquidity to avoid selling assets under pressure. A simple plan can still fail if a nomination is missing or if the family cannot find the documents.

For a high-net-worth individual, estate planning is usually more technical. The person may own a family trust, company, business, investment properties, an SMSF, private investments or assets in more than one country. Moneysmart notes that a family trust usually continues after death under its trust deed, while a testamentary trust can operate through a will. Business succession, control of a corporate trustee, tax on death benefits, asset protection and the treatment of different children or partners may need coordinated advice from a financial adviser, tax practitioner and estate lawyer.

Tax minimisation is only one part of the job. A plan should also be workable for the people who must administer it. Complexity can provide useful control, but it also creates more documents, costs, and opportunities for something to become outdated. A high-net-worth plan needs regular reviews after changes to family, business ownership, residence, legislation, or asset location.

How average means and high net worth change the trade-offs

“Average means” is not a legal category, and “high net worth” has no single Australian threshold. The ABS defines high-wealth households as the top 20% by net worth. In 2019 to 2020, median household net worth was $579,200 and mean household net worth was $1,042,000. These figures have changed significantly over the last six years, mainly because real estate values have risen. The gap between those figures reminds us that averages hide a wide range of circumstances.

A household of average means is more likely to be sensitive to housing costs, the Age Pension means tests, high medical bills and the loss of a partner’s income. Its plan may need to prioritise a stable home, manageable debt, accessible cash and eligibility for concessions. Paying for professional advice is itself a trade-off, so a one-off plan or targeted advice on a home sale, super, or aged care may suit better than an ongoing asset-based fee.

A high-net-worth household may have more capacity to self-fund care and absorb investment losses, but it also has more moving parts. The questions may include how to structure income across taxable and tax-advantaged assets, which entities control property, how to transfer a business, whether philanthropy is part of the legacy, and how to treat children fairly when their needs differ. An Age Pension strategy is usually less central, while tax, succession, governance, and family communication take centre stage.

Neither position removes risk. A modestly resourced household can make a damaging decision by releasing home equity too early. A wealthy household can create its own problems through complexity, concentrated investments, family conflict, or a plan that works only as long as one person can manage it.

Getting advice before acting

General information can help you prepare questions, but it should not be the basis for a major transaction. Before selling a home, changing a super strategy, gifting a large amount, borrowing against property or choosing aged-care accommodation, seek personal advice that considers the full balance sheet and the likely consequences for a partner and estate.

Choose an adviser who is authorised to provide the type of personal advice you need. Personal advice must take account of the client’s objectives, financial situation and needs.

Ask for the Financial Services Guide and a clear dollar estimate of fees. Advice may involve a Statement of Advice fee, implementation fee, ongoing fee, review fee or asset-based fee, as well as product and insurance costs. The cost depends on the complexity of the situation, the type of advice and whether support is one-off or ongoing. Compare the cost with the decisions being considered and ask what work will be done, what is outside scope and how conflicts are managed.

A financial adviser cannot replace other professionals. Use a solicitor for wills, powers of attorney, property contracts, trusts and family arrangements. Use a registered tax practitioner for tax consequences. Speak with a doctor and relevant health professionals about health, capacity and treatment preferences.

Conclusion

Good later-life planning puts each major decision in the same picture. Retirement income must be tested alongside housing, health and aged-care needs. Family help should be generous only when it is affordable and clearly understood. Estate documents should reflect the person’s wishes, how assets are owned, and who will make decisions if capacity is lost.

The best choice will differ between households of average means and high net worth, and between people with the same level of wealth but different health, family and housing needs. Treat the plan as a living document. Update it when the family changes, when health changes, when legislation changes and before signing a transaction that is difficult to reverse.

References

Important information: This article is general information only. It does not take into account your objectives, financial situation or needs. Before acting, consider obtaining personal financial, tax and legal advice that is appropriate to your circumstances.