December 4, 2023

Will rising healthcare costs kill the retirement buzz for Boomers?

New research carried out for Sun Life by Ipsos has found that while Boomers are looking forward to enjoying “the gift of time” in their retirement, “many overlook the impact health issues will have on both their plans and their wallets.

The survey was covered in a recent media release and noted that nearly one third of Boomers (fully or partially retired, ages 58 to 77) “cite healthcare costs as a factor causing their cost of living to be more expensive than anticipated in retirement.”

Healthcare was the second top concern of the surveyed group, with inflation coming in far ahead at 83 per cent, the survey found. Healthcare was at 32 per cent, followed by housing costs (31 per cent) and market volatility (23 per cent).

“Many retirees are not prepared or aware of the out-of-pocket medical expenses in retirement,” states Jacques Goulet, President, Sun Life Canada, in the media release. “These costs can have a significant effect on retirement, especially for those living with a chronic physical or mental health condition that requires ongoing treatment. With the cost-of-living climbing, a holistic plan that meets your health and financial security needs can help prevent this financial burden later in life,” he states.

It seems that the older you get, the more likely it is that you’ll have one or more chronic health problems that require testing, scanning, measuring, and treating.

“Nearly half (49 per cent) of Boomers surveyed shared that they have a chronic physical or mental health condition that requires medication or treatment. Of those living with a chronic condition, nearly a third (32 per cent) have or have considered changing their retirement plans to pay for health-related costs,” the release continues.

Even Millennials are starting to enter the chronic health problem universe.

“Nearly a third (31 per cent) of Millennials (aged 27-42) have a chronic physical or mental health condition requiring medication or treatment. Yet, over half (52 per cent) of Millennials with a chronic health condition have not factored the cost of managing their chronic condition into their retirement plan. When broken down by gender, 61 per cent of women and 43 per cent of men have not factored in these costs,” the release notes.

Sun Life recommends that people factor in future healthcare costs in their retirement planning.

Advisors, the release concludes, can help clients “develop a creative strategy to help them understand the costs of aging, grow their wealth, and ensure all aspects of life are supported. These critical conversations with a trusted professional will enable Canadians to enjoy their retirement.”

There’s a lot of truth here. Your provincial health plan and even your post-retirement benefit plans may not cover all the costs of drugs, dentistry, vision and health. So, $50 here and $100 there. Plus, if you have chronic health problems, the cost of out-of-country health coverage is much steeper than it was when you were healthy and young.

So, for sure, factor into your planning the fact that you may face healthcare costs.

Did you know that the Saskatchewan Pension Plan is open to any Canadian with registered retirement savings plan room? Why have a do-it-yourself retirement when you can sign up with SPP and have experts manage your retirement savings in a low-cost, pooled fund?

News flash: SPP’s Variable Benefit option is now borderless – any member can choose this benefit regardless of where they live in Canada. Find out how this flexible retirement option can work for you.

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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