Types of care

Retirement village vs aged care: what is the difference?

Updated 24 August 2026

A retirement village and an aged care home are different products with different prices and different levels of care. A retirement village is a set of purpose-built units for residents aged over 55 who do not require the higher care level an aged care home provides. The Australian Government subsidises no part of a village, so residents carry the full cost. An aged care home, the service often called a nursing home, takes in older people once their own home no longer works for them. An aged care home supplies a room, personal care and nursing access 24 hours a day. The government funds aged care homes and caps their daily fees and accommodation costs, while a village operator sets its own prices. Entry to government-subsidised aged care depends on an aged care assessment, while a retirement village resident normally pays an entry fee before moving in.

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What is residential aged care?

Residential aged care supports older people once living in their own home is no longer possible, and it is delivered inside an aged care home. The health.gov.au page on residential aged care sets out what an aged care home includes: a room, personal care, and nursing access at any hour of the day. Alongside those sit general health care, social activities and daily living services such as catering. My Aged Care describes the same scope from the service side, listing round-the-clock care plus services that support a resident's health, wellbeing, social life and safety.

The Australian Government subsidises aged care homes across Australia so that residential aged care is more affordable and easier to reach. That funding carries an eligibility gate. A person's age, needs and situation decide eligibility for government-subsidised aged care, and an aged care assessment settles whether they qualify and for which program. Residential aged care is not built for people below the age of 65.

The Elderberry directory lists 2,590 aged care homes run by 708 providers, holding 224,493 places, as at the August 2026 pull.

What is a retirement village?

A retirement village, as Services Australia defines it, is a cluster of units purpose-built for people over 55 to live in. Some villages bundle in services: meals, house cleaning, laundry and personal care.

Retirement villages sit below aged care homes on care level and outside the aged care funding system on cost. The health.gov.au page on aged care presents a village as the option for people who do not require the higher care level aged care homes offer. The same page states that the Australian Government subsidises no village, so a village resident meets the full cost. Moneysmart makes the same cost point about privately run retirement homes and villages: the resident pays the full amount.

A village's meals, house cleaning, laundry and personal care are household and personal support. None of those services reaches a room with 24-hour care and nursing access, which is what defines an aged care home.

Four differences between a retirement village and an aged care home

A retirement village and an aged care home differ in four ways: who each option is for, who sets the price, which law applies, and how a person gets in.

• Who each option is for. An aged care home takes older people who can no longer manage in their own home and who need personal care with nursing available at any hour. A retirement village takes people over 55 who do not need that level of care. Care need is the dividing line, so a person well past retirement age can still belong in a village.
• Who sets the price. The Australian Government subsidises aged care homes and caps daily fees and accommodation costs at set maximums. It also applies yearly and lifetime ceilings to income-tested and means-tested care fees, and once a resident reaches those ceilings the provider cannot charge any further care fees. A village operator sets its own entry price, its own service charges and its own rent, with no government schedule behind any of them.
• Which law applies. Australian Government-funded aged care runs under one main law, the Aged Care Act 2024. The providers delivering government-funded residential aged care are registered at Category 6 with the Aged Care Quality and Safety Commission. The Act also carries a Statement of Rights for older people using aged care services, and providers must keep their actions consistent with it. On the village side, Services Australia counts a retirement village only where the state's or territory's retirement village law covers it. Moneysmart tells buyers to use advisers who know retirement village contracts and their state's Retirement Village Code of Practice. Both point to state and territory law as the framework governing a village contract, although neither source draws that boundary against the Commonwealth aged care system in those words.
• How a person gets in. Entry to government-subsidised residential aged care runs through an aged care assessment, which reads a person's age, needs and situation. Entry to a retirement village runs through a contract. A resident normally pays an entry fee, also called an entry contribution, before moving in.

What does an aged care home cost?

An aged care home's fees sit inside limits the Australian Government sets, so what a resident pays turns on their means and on the date they entered care. Two different fee arrangements exist, and one of them applies to anyone entering residential aged care from 1 November 2025 onward. Moneysmart notes that a person who moved in earlier usually keeps the fee types that applied then, under the rule it calls "no worse off". Every figure below is the amount My Aged Care published as at 23 August 2026, and each one is indexed on a government schedule.

• The basic daily fee, which every resident pays. Every resident of an aged care home pays the basic daily fee, whatever their means. At current rates as at 23 August 2026, that fee reaches a maximum of $66.80 a day, or $24,382 a year. The rate is pinned at 85% of the basic age pension's single rate, and indexation lifts it every 20 March and 20 September.
• The hotelling contribution, under the 1 November 2025 arrangements. A resident who entered care from 1 November 2025 may also pay a hotelling contribution, capped at the hotelling supplement limit of $22.15 a day as at 23 August 2026. Means testing applies to that supplement, and indexation moves it each March and September, so a resident with lower assessed means pays below the cap.
• The non-clinical care contribution, under the 1 November 2025 arrangements. Clinical care costs are fully funded by the government in aged care homes under the arrangements that began on 1 November 2025, and the non-clinical care contribution excludes a person's clinical care cost. That contribution carries a daily cap of $107.32 a day as at 23 August 2026. A lifetime cap ends it as well: payments stop once total contributions reach $137,917.01 (indexed), or once 4 years of cumulative contributions pass, whichever arrives first. Indexation shifts both the daily cap and the lifetime cap in March and September.
• The means tested care fee, under the 1 July 2014 arrangements. A resident under the 1 July 2014 arrangements pays a means tested care fee somewhere between $0 and $372.03 a day, on rates current at 23 August 2026. That fee is capped at $35,910.43 a year and $86,185.23 across a lifetime. Both caps move at the March and September indexation.
• Accommodation, paid as a lump sum or daily. Accommodation is paid three ways. A refundable accommodation deposit (RAD) is a lump sum paid up front, which the home refunds when the resident leaves, though a retention amount can apply where the resident moved in from 1 November 2025 onward. A daily accommodation payment (DAP) is a daily amount that replaces the lump sum, and the third option combines the two. A resident who can afford the room pays for it, and where means are lower the government covers part or all of the accommodation cost. A person whose income sits below $35,521.20, with assets below $64,500.00, has their full accommodation cost met by the Australian Government. Indexation changes both the income figure and the asset figure.

How much does it cost to live in a retirement village in Australia?

No national price exists for a retirement village, because each village sets its own fees, service costs and rent, with no government schedule behind them. Services Australia describes what a resident pays in two parts. Moving in normally requires an entry fee, or entry contribution, paid up front, and that contribution can reach the full market value of the unit. A resident may also face ongoing costs for the village's services and facilities. Whether a particular village is expensive therefore depends on the entry contribution and the ongoing costs its own contract sets.

What is the downside of living in a retirement village?

Three downsides follow from the way retirement villages are structured, and each traces back to one fact: a village is private housing the resident pays for in full.

• The care a village provides has a ceiling. A retirement village serves people who do not require the higher care level of an aged care home. Once a resident's care needs grow past what the village provides, residential aged care becomes the option that covers them, which means a second move and a room price agreed with an aged care home.
• What you buy may not be ownership. Retirement village units come under several tenure types: loans, licences and leaseholds, with some units held as strata title or company share. All of these protect a tenant's rights, and only some hand over owners' rights. Because the tenure type decides which of those two positions a resident holds, Services Australia's advice is to take legal advice before buying into a village.
• The operator sets the fees, and they can rise. Retirement village operators price their own units, services and rent, so the government-set maximums and caps that bound aged care home fees do not reach a village contract. Moneysmart's instruction to anyone signing up is to check every fee and charge, and how each may rise over time, before signing.

How does Centrelink view retirement villages?

Centrelink assesses a retirement village resident as either a homeowner or a non-homeowner, and the size of the entry contribution decides which. The assets test limit for a non-homeowner sits above the limit for a homeowner, and Services Australia names that gap the extra allowable amount. Services Australia then measures the entry fee paid against that gap.

A retirement village entry fee larger than the extra allowable amount makes the resident a homeowner for Centrelink purposes, and the entry fee then stays out of the assets test. An entry fee at or below the extra allowable amount makes the resident a non-homeowner.

The homeowner or non-homeowner classification decides whether a retirement village resident receives Rent Assistance. A resident assessed as a non-homeowner may receive Rent Assistance, calculated by Services Australia on the resident's ongoing fees in the village. A resident assessed as a homeowner likely will not qualify.

What is the alternative to a retirement village?

Three alternatives to a retirement village are government-subsidised in-home aged care, a residential aged care home, and a lifestyle village.

• Staying in your own home with in-home aged care. In-home aged care supplies support that helps a person hold their independence for as long as possible. Moneysmart confirms the government offers subsidised home care to people who want to remain at home. Access runs through the same aged care assessment that gates other government-subsidised aged care, so age, needs and situation decide eligibility.
• A residential aged care home. An aged care home is the alternative once a person can no longer manage at home, because it supplies a room, personal care and nursing access around the clock. An aged care home also carries the subsidy: government funding for residential aged care exists to keep it affordable and reachable, which changes the cost comparison against a village that carries none.
• A lifestyle village. Services Australia assesses lifestyle villages on a different basis from retirement villages, and a person living in a lifestyle village is usually eligible for Rent Assistance. That is a different starting point from a retirement village, where Rent Assistance depends on the homeowner test above.

When does someone move from a retirement village into an aged care home?

A resident moves from a retirement village into an aged care home once their care needs pass the level the village serves. A retirement village is built for people below that care level, so needs beyond it have to be met somewhere else. Three requirements govern entry to a government-subsidised aged care home.

• The aged care assessment. An aged care assessment determines whether the person qualifies for government-subsidised aged care and which program suits, judged on their age, needs and situation.
• The means assessment. The means assessment fixes the resident's share of the cost and the Australian Government's share. For most people, Services Australia does the means assessment.
• The written room price. Before entry, the resident and the provider must settle the room price in writing. A resident whose means are low enough has part or all of that accommodation cost met by the Australian Government.

Common questions

Is a retirement village the same as a nursing home?

No. A nursing home and an aged care home are one service under two names, and the Australian Government funds it for older people who can no longer manage at home. A retirement village is a different product with a similar-sounding name: privately run housing a resident buys into under a village contract.

Do you need an aged care assessment to move into a retirement village?

No. Moving into a retirement village unit does not require an aged care assessment, because an aged care assessment decides eligibility for government-subsidised aged care and no subsidy sits behind a village. Services Australia names one exception: it treats serviced units in a retirement village as aged care facilities only where government funding flows to them. A unit in that position requires an aged care assessment before anyone can live there.

Can someone stay in an aged care home for a short time only?

Yes, through residential respite care. My Aged Care states that residential respite covers up to 63 subsidised days in a financial year, as published at 23 August 2026. The residential respite entitlement extends in 21-day blocks where the assessor approves again. The health.gov.au page last updated 4 February 2026 states the same 63 subsidised respite days per financial year for a person already assessed and approved.

What happens to the family home when someone moves into a retirement village?

Services Australia may exempt a former principal home from the assets test where the person left it due to illness and entered a care situation, and it lists retirement villages among the care situations that trigger this treatment. That exemption runs for 2 years, counted from the date care begins, per the Services Australia page last updated 5 June 2026. After those 2 years, the home counts as an asset and the person is assessed as a non-homeowner.

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