These days, Canadians are living longer than ever, with men living to an average age of 80, and women, in general, making it to 84 years, according to the World Health Organization. Unfortunately, Canadians’ saving habits have not kept pace, meaning this group risks outliving their money or not having the funds to support future and long-term care needs.
While many Canadians assume that their earlier retirement years (when they’ll likely be engaged in such activities as golf and travel) will be their most expensive, it’s actually their later years when they may need long-term care or home care that will be the most expensive, Cathie Hurlburt of Vancouver’s Assante Financial Management Ltd. explained to The Globe and Mail.
Five percent of Canadians will end up needing long-term care but a survey done by Leger Marketing for the Canadian Life and Health Insurance Association (CLHIA) found that 74 percent of respondents said they haven’t accounted for long-term care in their retirement plans.
When it comes to preparing for the possibility of needing to pay for long-term care (either in a private or government-subsidized residence where 24-hour nursing and personal care is provided), there are two main options. You can either include this as a component in your retirement savings plan or purchase an insurance policy that will cover the costs of care once you need it.
The cost of long-term care in a government-subsidized residence varies depending on your province. Five years in a long-term care facility in B.C., for instance, will set you back between $59,472 and $189,450. To estimate the amount based on your potential situation, use this clever calculator created by The Globe and Mail https://www.theglobeandmail.com/globe-investor/retirement/long-term-care-costs/article26913111/ (If you choose to live in a private non-government subsidized residence, the costs can be even higher.)
Determining whether you should use your own retirement savings or purchase an insurance policy to cover the costs of long-term care depends on a number of factors including the amount of your assets, your income and your age. The rule of thumb is that the best time to buy long-term care insurance is in your 50s when the premiums will still be reasonable. This guide from The Council on Aging of Ottawa can get your thinking about whether long-term care insurance is right for you.
In addition to reading the guide above, it’s also smart to consult trusted financial advisors, insurance providers, trusted family members or long-term financial planning specialists such as those at Living Well Solutions when making decisions about how to fund future and long-term care.
Those not yet having to worry about long-term care may be planning to first live in a retirement residence that offers independent living options. Currently, the province of B.C. doesn’t fund independent living residences, but there is a BC Housing program called SAFER (Shelter for Elderly Renters) for seniors in need of financial support. (bchousing.org)
However, many older adults plan to use their pensions, RRSPs, CPP, income from second careers and other assets to fund the costs of Independent Living. This Retirement Cost Calculator can help you determine how you can afford your ideal retirement community.
Though it can be a complicated topic, there are myriad resources (including those listed above) to help you navigate the world of future care funding solutions.