Health-Care Costs and your Retirement Portfolio

Here’s the question. Can your retirement portfolio withstand the future costs of health care—for either you or your aging parents? The once bountiful Canadian (Provincial) health-care dream versus the painful reality that the program has become may not add up to feelings of confidence. Especially when it comes to financing future health-care costs as increasing numbers of us contemplate retirement and what our personal retirement savings plans and portfolios can withstand.

That is the worrisome conclusion of Gail Johnson, writing in The Globe and Mail. (Health-care costs threaten even the most robust retirement portfolios, May 16, 2018). It makes for sombre reading. We want to share the story with you.

The experience of a Canadian health-care expert

Johnson wrote:

Susan Hyatt, an international health-care expert based in Oakville, Ont., was working overseas in London advising the BriCHRISTINA government seven years ago when she had to fly home to help her parents. Both live in different cities, and each was experiencing a health crisis.

Despite having taught at the faculty of medicine at the University of Toronto for many years and holding executive positions on multiple health-related boards around the world, including that of St. Michael’s Hospital in Toronto, Ms. Hyatt found herself facing an extraordinarily challenging situation.

‘It didn’t matter what I did; I could not get either one of my parents moved out of a hospital setting back into a community setting,’ she says. ‘They were both suffering from dementia and other illnesses and neither of them could go to their own homes. It took me six months.’

Who cares: The economics of caring for aging parents

This problem, far from being unusual, is endemic, according to data cited by Johnson:

• The average length of time Canadians spend as caregivers for an elderly person who becomes ill is more than six years.
• Nearly 30 per cent of those with parents older than 65 needing help must take time off work, sacrificing roughly 450 working hours a year.
• Basic care at a retirement facility can run on average around $4,000 to $5,000 a month for one person. The starting point for dementia care is $7,000 a month.

Your retirement assets, however substantial, may not be enough

Even if you are fortunate enough to have accumulated substantial pre-retirement and retirement assets, the cost of health care can be daunting. All the more reason to take an analytical look at your spending habits and the potential liquidation of assets, such as second or third properties, as part of your preparation to fund increasing health-care costs. Your financial advisor can help in these matters.

Simplify your finances

Simplifying your finances is especially important when you have the acuity and energy to handle the complexity involved. Plan ahead. It can be a burden on your heirs, not to mention a significant expense, when you have to do it as your intellectual capacity deteriorates.

As Johnson reports: “Having a proper succession plan and a plan to deal with accrued tax liabilities are part of the organization of finances. So is ensuring that designated beneficiaries are in place on registered accounts, estate plans and wills to avoid future conflict.”

Conclusion: The 747s are on a final approach

Quoting Susan Hyatt again, Johnson reports: “As I say to families, the 747s are on a final approach. They are going to land, and it’s only a question of whether they’re landing this week or six months from now. You better get your ducks in a row if you’re going to be ready.”

Now is the time to speak with your financial advisor and be better prepared.

Book an appointment with me 250-787-0365 and let’s talk.