Why planning for care in retirement matters
In a perfect world, we’d all spend our retirements active, healthy and living independently.
Unfortunately, that’s often not the case. For example, only 40% of people in Canada over 65 say they’re in “good or excellent” perceived health.
Canadians are also living longer. The average 65-year-old can currently expect to live about another 15 years. At the same time, your likelihood of illness increases with age.
This can mean that what makes sense at the typical retirement age of 65 doesn’t work when you’re 80.
And that’s where planning for care comes in.
How to assess any future care needs as you age
Healthspan is how long you live in good health. Lifespan is how long you live. For many Canadians, their healthspan is shorter than their lifespan.
This is why ensuring you have a plan for how you will navigate possible years of poor and declining health can be an important part of your retirement plan.
No one has a crystal ball, but it can be helpful to think through a few scenarios.
For example: What would you do if your health declined and you needed additional daily support but you could still live independently?
Or, what would you do if your partner developed mobility issues and couldn’t manage the stairs in your family home?
What if you developed memory issues, and you weren’t able to make decisions for yourself anymore?
While it can be hard to think about, these are all common situations. It won’t make it easier but knowing how you’d tackle these kinds of health changes can make it simpler if the time comes.
How can you plan for care in retirement?
Take the time now to consider what you’d like to happen if your health changes as you age.
One key concern is how you would pay for increased care. You might consider creating a few different budgets based around different health scenarios.
For example, Budget A assumes you’re relatively healthy and able to live independently in your home, while Budget B takes into account living in a retirement home with significant care needs. You may see that one budget is higher than another, meaning you’ll also need to figure out how you’d balance income versus expenses in the various scenarios.
One strategy to consider is investing, both while you’re still working and when you’re retired. If you’re able to continue growing your money, it can help cover the rising expenses that can come with age.
Mutual funds, annuities and segregated funds are some of the financial products that you can use as part of a plan to continue growing your wealth as you age
If you own your own home, you may also consider down-sizing or selling to release that equity and help cover care costs.
You may also be eligible for retirement income through the government, like GIS and OAS, in addition to any workplace pension you might have.
It can also be helpful to share your wishes with your family members or other trusted people. This can help avoid any confusion or conflict down the road, especially if you’re no longer able to make these decisions yourself. These can be emotional events, so having a clear idea about your wishes now can help make the future smoother.
You could do this as part of your estate planning, which can include making a will and instructions about your medical care if you’re unable to make decisions for yourself.
Working with your advisor – sooner rather than later – can help you figure out ways to consider all these variables and more, if they come as part of your overall retirement planning.
What kind of care is available in retirement?
There are different kinds of care available as you age depending on your needs.
Here are a few of the more common options:
Government support
This can vary depending on where you live, but there are government programs that can help support Canadians as they get older.
For example, the Canada Dental Care Plan can help eligible seniors pay for some dental needs, while the federal Age Well at Home Initiative has a pilot project helping lower income seniors stay in their own homes for longer by assisting with needs like maintenance, housekeeping and meal deliveries.
You may also find charities or non-profits in your community that support seniors in many ways, including companionship, transport to hospital appointments or running errands and financial assistance.
Private health insurance to help with increased medical expenses
As you age, you might find you have more health expenses that aren’t covered by your government healthcare. For example, you may need physiotherapy after a fall, or mental health services as you cope with the death of your partner. You may need a mobility device, hearing aids or laser eye surgery if your vision worsens with age.
Private health insurance like Freedom to Choose health and dental insurance can help cover some of these out-of-pocket expenses. If you have a pre-existing condition, which is more common when you’re older, there are even guaranteed acceptance plans than don’t ask medical questions.
In-home care
If you can still live independently but need some support, in-home care like home health aides can be an option.
Rates vary, but in Ontario, for example, the cost for a personal support can range from $28 to $35 per hour.
If you have private health insurance like Freedom to Choose health and dental insurance, you may have coverage that can help with this.
If you have a family member who can care for you, they may be eligible for government support if they have to take time off work to look after you.
Senior living facility
When you no longer want or can live in your family home, senior living facilities can be a good option.
They can offer varying levels of care depending on your circumstances. Some might enable you to live independently in your own unit but having dining facilities, or group activities to help you stay connected and active.
Senior living facilities can also cater to higher care needs. For example, there are specialized facilities for memory care.
The costs for these facilities vary, but the average rent for a standard space that doesn’t include high-level care is $3,075 per month in Canada.
Long-term care
If you need help with daily activities and require 24-hour access to nursing care, long-term care homes can be an option. Your government healthcare will often pay for the cost of your care in a long-term care home, although there are often fees for extras like Internet or cable TV.