With people living longer, financial planning and saving is required to make aging at home a viable option for most.sturti/iStockPhoto / Getty Images
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Aging at home is what most Canadians prefer to do, and the federal government is being asked to provide an age-at-home benefit as part of 20 recommendations from the National Seniors Council. But with people living longer, financial planning and saving are required to make aging at home a viable option for most.
“We certainly have clients who are very interested in discussing what would be necessary to age at home,” says Christine Van Cauwenberghe, head of financial planning at IG Wealth Management in Winnipeg.
“The one thing I would say, though, is unfortunately a lot of those conversations don’t come up soon enough in the financial planning process.”
The federal government’s expert panel recommended a new age-at-home benefit that would be based on income and an assessment by a qualified practitioner and could cover services such as health care, personal care and domestic tasks.
Other recommendations from the panel included making the $1,250 Canada caregiver credit refundable and increasing the guaranteed income supplement, which currently maxes out at just more than $1,000 annually, by $600 annually for singles over 65 and $900 annually for couples.
However, these measures are likely not enough as the average per-person out-of-pocket annual health care spending for Canadians aged 65 and over is $12,000, according to the Conference Board of Canada. Health care costs, the largest budget item for provincial governments, are expected to increase dramatically as people over 65 are projected to account for 23.4 per cent of the population and 71.4 per cent of total health care expenditures in 2040, according to the Fraser Institute.
For most Canadians, living at home in their later years is what they want. A 2020 survey from the National Institute on Ageing and Canadian Medical Association showed that as many as 96 per cent of Canadians aged 65 and older reported they would do everything they could to avoid going into a long-term care facility.
Aging is one of those subjects that can be uncomfortable for people to bring up, but if clients want to be financially secure in those later years it’s a necessity.
Ms. Van Cauwenberghe groups retirement into three parts: the go-go phase, the slow-go phase and the no-go phase.
“Sometimes, people don’t think about those other later phases enough,” she says. “If you thought about them early on, you could think about things such as long-term care insurance. Do you have a way to fund the caregivers and the people – the private care that you might need to stay in your home?”
Private in-home care can vary quite a bit depending on the province, with care subsidized in the three territories but costing $35 to $98 an hour for skilled nursing care in British Columbia, according to data from Senior Care Access.
Jillian Bryan, senior portfolio manager and investment advisor with TD Wealth in Vancouver, says Old Age Security wouldn’t be enough to fund most Canadians’ vision of aging at home. That’s where investments come in.
“There are tax-efficient investments that are still very conservative,” Ms. Bryan says, such as mutual funds with return of capital distributions. “The goal is to pay you 4 or 5 per cent annually a year, but it pays return of capital first. It’s technically giving you your money back first. You’re paying no income tax.”
Insurance could also be worth looking into, she says, especially critical care. Ms. Bryan recalls a meeting with a client who had been diagnosed with breast cancer. The client happened to have her pay stub with her and had been paying for critical care insurance through her employer but had no idea. She was able to receive tens of thousands of dollars.
In some cases, downsizing to a smaller home may be an efficient way to fund aging at home, but there are many things to consider, says Ngoc Day, a financial planner and portfolio manager at Macdonald Shymko and Co. in Vancouver.
“I have many clients who come in and say, ‘I want to live in a condo with no stairs [and] a pool,’ and they’re happy with that. But for others, they’ve been in their home and spent years in their garden, that’s where they derive their joy. If that’s taken away from them, often it’s not helpful.”
Staying in one’s home may also require extensive renovations such as putting a bedroom and bathroom on the main floor or building a ramp to the front entrance. These renovations require planning to avoid going into debt.
“All of those begin to take shape and the money side of it comes out of those conversations,” Ms. Day says.
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