Understanding and preparing for the costs of care in our elder years is a critically important element to one’s investment planning today. Here are five things that can help.

Canadians continue to extend their life spans, with the average age of death today reaching 82 years, or 84 for women and 80 for men.¹ Advances in health care and drug treatments, along with healthier lifestyle choices (e.g., exercise, eating better, not smoking) are mostly to thank for this phenomenon.² And our lifespans are expected to keep getting longer still, with living into one’s nineties or beyond no longer an extreme outlier.³

A compelling reason to care about one’s care

While an increasing number of Canadians will be blessed with longevity, the older we get the more risk there is that we will encounter illnesses and even incapacitation. We more often than not require the most care in the last years of our lives. Unfortunately, this is likely to be the time when we are most vulnerable and dependent on others to deliver that care.

How we want to live in our elder years – and, in fact, can afford to live – is therefore an increasingly critical component of investment planning, as most of us will require our savings to meet those costs. With assisted living at home or at a private residential care facility costing as much as $100,000+ per year, how one plans for these costs today is increasingly important.

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“An ounce of prevention is worth a pound of cure.”

Preparing today for the eventuality of the challenges of aging and its associated costs of care can help you keep your options open as to how you would prefer to live in your elder years. Here are five things that can help:

1. Set your time horizon to 100: As Canadians live longer, the need to fund one’s retirement and especially elder years when the cost of care peaks, is getting longer, too. When it comes to thinking about an investment portfolio, it ideally should meet your needs for your entire life, not just to your retirement date.
2. Leverage the power of equities: A risk-appropriate and properly balanced portfolio that leverages the long-term historic power of equities to grow your wealth over time can help offset the corrosive effects of inflation, the drawdowns needed to fund your cash flow, and unexpected costs in your later years.  
3. Generate cash flow: The more a portfolio can generate cash flow from various sources – interest payments, dividends, distributions, return of capital – can help fund your care costs over time, without the need to draw down on your capital. 
4. Establish a Health Care Directive: Letting your loved ones know how and where you wish to be cared for is important, and will remove unnecessary concern for them if you become incapacitated.
5. Research your care options: While most Canadians want to live in their home until they pass away⁷, it is not the only option, nor necessarily the optimal one. Research care options before deciding on what’s right for you, and realistically align your choice to your financial means.   

Talk to us about how we can help you plan with care today for the costs of care tomorrow. 

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Sources

¹ Statistics Canada, “Life expectancy and other elements of the complete life table, three-year estimates, Canada, all provinces except Prince Edward Island” (January, 2022).

² Public Health Agency of Canada, “How healthy are Canadians?” (April, 2017).

³ FP Canada – Standards Council, “Projection Assumption Guidelines” (April, 2021).

⁴ https://silvercross.com/stair-lifts/ (accessed June 16, 2022)

⁵ Bryan Baeumler, HGTV (2021).

⁶ Source: Ontario Ministry of Health and Long Term Care. As of July, 2019.

⁷ National Institute of Ageing (NIA)/TELUS Health Survey (2020)

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