The costs of aging aren't often top of mind. When faced with situations where a loved one needs care or you yourself need some assistance, the magnitude of these costs can be surprising.
"It isn't easy for people in their 50s to relate to care issues that may be 20 or 30 years down the line in their own lives. Then, suddenly, one of their parents is in a situation they may not have prepared for—and they scramble to do what's needed," says Howard Kabot, vice president, Financial Planning at RBC Family Office Services.
"It makes you aware of what could happen when you get to that stage of your life," says Kabot, who recently helped his mother downsize from her home. "You thought you'd travel the world until age 95, and if you do, great! But what's the backup plan? What does a backup plan for care do to your finances?"
To better prepare for retirement and the uncertainties of aging, here are the top five costs of care to consider when planning for your financial future:
1. The cost of private home care
Not everyone qualifies for publicly funded home care, and government programs don't always provide the hours or level of care that people want.
"When people ask me, 'How much should I put aside for private home care?' I'll say, 'That's not easy to answer because your care needs can change overnight,'" says Audrey Miller, managing director of Elder Caring Inc., a recognized leader in life-care planning, aging and caregiving issues.
"If you need somebody four hours a day to do light shopping, make a meal and do laundry, that's one thing. But if you were to have a stroke or need somebody to turn you in bed every three hours—well, that's 24/7 care."
It could cost over $100,000 annually to have in-home care eight hours a day, not including stat holidays, explains Miller. That's based on an average hourly rate of $35 for a personal support worker in Ontario, and costs are rising with demand.
2. The cost—financially and emotionally—to family caregivers
Would you have to rely on a loved one or family member should you need care in the future? Consider the impact on the lives of those in the caregiving role.
According to Statistics Canada, one in four Canadians aged 15 or older provides care to a family member who has a long-term health condition, disability or age-related concern. Of that, almost half reported caring primarily for parents or parents-in-law.
"The cost of care is not just financial, it's an emotional one for the caregiver," says Miller, who recently partnered with RBC Wealth Management as their latest healthy aging partner. Together they produced an educational video series on healthy aging, including tips on how to avoid caregiver burnout.
"Family can't always manage it all. They're juggling other roles. It's physically and emotionally taxing."
The financial burden on unpaid caregivers may include lost wages or missed career opportunities.
3. The cost of renovating to age at home
Aging at home is a top goal for most retirees. Nearly 100 percent of Canadians aged 65 and older hope to live independently in their home as long as possible, according to a survey by the National Institute on Aging and TELUS Health.
"Home is where all of us want to be," says Miller.
The average cost of a basic, aging-in-place remodel that includes bathroom safety supports and a stair lift can range from a few hundred dollars up to more than $25,000.
A renovation could incorporate universal design elements, which makes the space safe and accessible by all people regardless of age, ability or other factors, to accommodate future health changes. Examples could include curbless shower stalls in the bathroom or reinforced walls for grab bars.
As expenses add up, a retrofit may not be practical. "Ask yourself, 'Is it feasible for me to stay here?'" says Miller.
4. The cost of private residential care
The tragedy in Canada's nursing homes during the COVID pandemic shone a light on inequities in our system of residential care.
"It raises the issue of the type of care you envision for yourself, and also affordability. People do live in luxurious retirement homes, but they pay a hefty price for it. Others are in provincially funded long-term care homes. They are much more affordable, but the care is different," says Kabot.
The cost of private residential care can range from $2,500 to more than $10,000 per month, depending on the location and the level of health care or assisted living service required, Miller explains.
Private retirement residences range from luxury condos with white-glove service and amenities to modest senior communities. Many offer access to 24-hour nursing and personal care, paid for as needed, or specialized dementia care.
5. The cost of living longer (statistically speaking)
The number of Canadians living to age 100 and beyond reached a record high in 2021, and the cause is not only population growth. In 1971, five out of every 100,000 Canadians were 100 or older; in 2021, that proportion rose to 26, according to Statistics Canada.
Your financial plans and investment portfolio should, ideally, meet your needs for the duration of your lifetime.
"We typically model plans to age 95. It used to be 90 was the standard life expectancy; but, generally, our clients are living longer. They're healthier and taking better care of themselves," says Kabot.
"It obviously means you have to have the assets to get you there, and the income to cover the costs of care. But that's the whole purpose in planning. If there's a shortfall predicted, now's the time to understand what it will take to get you to that goal.
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