Women and health: Planning a legacy in the face of longevity

Mar 06, 2020 | RBC Wealth Management


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Statistics show 70 percent of new Alzheimer’s patients are women. What you need to know about planning for long-term care.

Mature business woman working

Canadians are living longer now than ever before, yet, as women traditionally outlive men, a longer life expectancy also brings added pressure for the family matriarchs to manage their wealth and legacy.

According to the latest statistics, there are 20 percent more women over 65 than there are men in Canada. There are also two women for every man in the 85-and-older population, according to the 2016 Census. The gap widens for those over age 100, with women outnumbering men by nearly five-to-one.

As the population ages, an important consideration is the cost of health care, which tends to increase as seniors get older. Costs include medical expenses not covered by the publicly funded health care system, such as medical equipment, certain medications, in-home care and long-term-care facilities.

Commissioned by RBC Wealth Management, The Economist Intelligence Unit (EIU) undertook a study of 1,051 high-net-worth individuals (HNWIs), including 259 respondents in Canada, from March to May, 2018. The new face of wealth and legacy survey explores how the meanings of legacy and wealth are being redefined across regions, genders and generations.

According to EIU research, 46 percent of Canadian respondents say their most important life goal is to improve their physical and mental wellbeing. Not surprisingly, that number increases to 66 percent for older women.

“Health care expenses can have a significant impact on a person's financial future,” says Leanne Kaufman, head of RBC Royal Trust and president and CEO, Royal Trust Corporation of Canada and The Royal Trust Company.

Statistics from the Women's Brain Health Initiative show women suffer from dementia twice as frequently as men and approximately 70 percent of new Alzheimer's patients are women. There’s also a higher risk of women being diagnosed with Multiple Sclerosis.

Kaufman helps to educate women across Canada about the importance of having a wealth management plan which takes into consideration both rising health care costs and a longer lifespan.

“Women need to start by thinking about their wants, as well as their needs, as they get older,” says Kaufman. “You may want to give money away to kids and grandkids or to philanthropic causes during your lifetime, to enjoy the benefits of giving, but bear in mind the costs you may have to pay, which can increase over time. In other words, don't spend it all too soon.”

Steps to manage your wealth and health

According to The EIU survey, 87 percent of women say they are in control of their legacy and 80 percent believe it is important to lay a foundation to define it for their family and future generations. About 80 percent also aim to align their wealth plans with their legacy.

Kaufman recommends women start by ensuring they have a comprehensive wealth management plan. If the woman is a widower or divorced, her plan will likely need to be updated.

“You need a well-thought-out plan that includes a financial plan, as well as a Will and power of attorney,” says Kaufman. “A power of attorney is particularly important because it affects you while you're still alive.”

Research shows not enough Canadians have a comprehensive wealth management plan which includes a Will and power of attorney. RBC Wealth Management's 2017 Wealth Transfer Report shows just over half (52 percent) of respondents have a Will. Kaufman also cites industry statistics that show less than a third of Canadians have a signed power of attorney. A power of attorney is a legal document that gives another person (or a trust company) the power to take care of your financial and legal matters if you're away, or sidelined by illness or injury. (The person given this power is called the “attorney” and it doesn't refer to a lawyer).

There are different types of power of attorney that can handle property and finances, as well as an “enduring” or “continuing” power of attorney which makes decisions if you're incapable. There is also a power of attorney for personal and health issues. Kaufman says the attorney should be someone with financial acumen who you trust and can be available to communicate important and timely decisions.

“Every Canadian with assets of any size needs a power of attorney,” Kaufman says. “If anything were to happen to you while you're still alive, there needs to be someone who can deal with your assets.”

The importance of a wealth plan

Alongside a Will and a power of attorney is the need for a complete financial plan that takes into consideration the money you'll need in retirement — including funds set aside for health care costs — as well as assets you want to leave behind to children or charities.

With health care costs, a good wealth management plan can help forecast expenses based on a person's personal preferences. For instance, some people might want to remain in their home when they become seriously ill and hire health care professionals to take care of them there. Others may prefer to move into a long-term-care facility. Either way, the costs of this care can be several thousand dollars each month. “All of those things have costs associated with them,” Kaufman says. “Once we understand someone's preference, we can plan for it.”

Kaufman also encourages women to do this planning sooner, rather than later. The worst time to tackle a financial plan is when there's a negative life event, such as the diagnosis of a serious illness or a death in the family.

“It will be too shocking to have to absorb it, while also trying to cope with what's happening to loved ones,” says Kaufman. There's a risk of making overly emotional decisions or mistakes in the wealth management plan.

Women embracing wealth and health planning

The good news is many women are open to wealth and health planning, says Jennifer Lemieux, vice president and branch manager at RBC Dominion Securities in Kingston, Ont.

“Women love to be educated and to do research on the things that are important to them, which is often tied to their well-being and their family,” says Lemieux, who works with women of various ages and financial circumstances.

According to The EIU survey, 41 percent of Baby Boomer women expect to give their wealth to their children. For Baby Boomer men, a spouse and children are close, at 39 percent and 32 percent respectively. Younger women with fewer family responsibilities slightly more often than older women plan to allocate assets to charitable organizations, which suggests priorities may shift towards family as women age and obligations change.

“For many women, there is something heartwarming about watching the wealth you've built directly impact the lives of your children or grandchildren,” says Lemieux.

However, Lemieux also finds herself reminding her female clients to set aside enough assets for themselves, to ensure they live a comfortable and happy life.

“What we don't want is for someone to give away too much capital and an unforeseen event comes up and now, rather than helping your children, you're living with them,” Lemieux says with a laugh.

A complete wealth management plan, built with the support and guidance of an experienced wealth professional, can give women financial control — and a sense of empowerment as they age. “It helps to reassure them that, what's really important to them is looked after,” Lemieux says.

The minimum investable wealth of respondents is US$1 million (C$1.29 million). The margin of error on the Canadian sample is 6.1 percent with a 95 percent confidence level.

In Quebec, financial planning services are provided by RBC Wealth Management Financial Services Inc. which is licensed as a financial services firm in that province. In the rest of Canada, financial planning services are available through RBC Dominion Securities Inc.

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