September 18, 2023

We’re living longer, but not healthier — and may face costly care in our latter years

Writing in The Globe and Mail, columnist Rob Carrick reveals that our future cost of care — once we’re all elderly — could average about $3,500 per month.

Retirement savers, he writes, already have to consider “high interest rates and inflation” when predicting future costs. “Now comes one more complication: we’re living longer, but not healthier,” he writes.

So long-term care costs may be something many of us will be dealing with in the latter phases of life, and Carrick says it can be a pretty considerable expense.

“Health issues can be managed so that you have a good quality of life, but the expense is potentially massive. Reckoning with this cost is best done in the retirement planning stage as opposed to your 80s or 90s, when your options are more limited. You need to answer this question before you retire: If I need extensive care in retirement, how will I afford it,” he writes.

The two options, which the article notes are covered off in a new report from the Bank of Nova Scotia, are basically “aging in place,” at home with help, or moving to a long-term care facility if and when the need arises.

Carrick notes that while he now sees “happy 100th birthday cards” in card shops, and that financial planners tell him they are seeing more and more clients in the 90-100 year age range, those extra years of life are not always healthy ones.

“What’s less understood about longer lifespans is that some of our latter years could well be spent in poor health. Life expectancy for the average 65-year-old today is 21 years, with full health for just 15 of them,” he writes.

Three quarters of us aged 65 or older “have at least one major chronic disease, while one-third have multiple conditions,” the article continues. “More than 80 per cent of seniors at age 85 suffer from hypertension, over half from osteoarthritis, and one-quarter from dementia,” he continues.

These conditions can mean you’ll need help “to perform six aspects of daily living — bathing, dressing, eating, toileting, continence and being able to walk or transfer yourself from a bed to a wheelchair,” the article adds. That’s where the costs begin to rise.

“Light home care of five hours per week might be covered by provincial governments, whereas 22 hours per week might cost $3,500 a month. According to the Canadian Medical Association, 22 hours of home care per week is consistent with keeping people at home rather than a long-term care home. For continuous home care, the price could be close to $30,000 per month,” he writes.

We can add from personal experience that long-term care costs were around $5,000 per month when our late mom needed it.

How to fund that sort of cost, which might be needed for five or six years?

“If you don’t have the savings to cover care costs, your options include downsizing your home to pry loose some equity, or borrowing against your home value using a home equity line of credit or a reverse mortgage. Long-term care insurance bought before retirement is another possibility, but this type of coverage has not caught on,” the article notes.

In any case, future long-term care costs should be part and parcel of your overall retirement savings plan, the article concludes.

This is an eye-opening and alarming article. The implication is that maybe your retirement costs will actually increase, and that will happen at post-85, when you have very few options to deal with it. A takeaway from this piece, for us at least, is to never stop saving for the future.

If you don’t have a workplace pension arrangement, and are saving on your own for retirement, you may be interested to learn about the Saskatchewan Pension Plan. SPP has been helping Canadians save for retirement for over 35 years. SPP offers a voluntary defined contribution plan that any Canuck with registered retirement savings plan room can join. You decide what to contribute, and SPP invests it for you in a pooled fund with a great track record and low-cost professional management. Check out SPP today!

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Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


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