So you’ve got your retirement plan, and it looks like you’re good for income until age 90. Case closed… right?
Well, not so fast. Later stages of life require a different plan for finances that includes contingencies for deteriorating health to age well in place… or whether to move somewhere more age friendly.
And financial institutions — particularly big banks — are taking note.
"We traditionally think about retirement planning as dealing with questions like, ‘Do I want to travel a lot when I retire?’ ‘Do I want to help my kids buy their first house?’" says Leanne Kaufman, president of RBC Royal Trust.
"These are things in the near-term, post-retirement, but we don’t necessarily spend a lot of time thinking about the really significant costs that can come in the later years in retirement."
To that end, RBC’s trust business — which provides executor and power of attorney services among others — launched a new initiative this fall to help individuals plan for the later stages of life, whatever may come, for better and for worse.
"It’s not unlike financial planning because you’re thinking about the what ifs, the needs and the wants," she says. "But you’re trying to get in front of potential health care and caregiving issues rather than trying to deal with things as they happen in a moment of crisis, which is what typically occurs for many people."
It’s not just retirees wondering about home care and related services’ costs to help them stay in their homes longer, or considering what the impact would be of paying for long-term care or assisted living.
Their adult children — the sandwich generation — should also be part of the conversation because they are often providing care and even in some cases helping their parents manage their finances.
"Care is expensive," says Audrey Miller, managing director of Elder Caring Inc., based in Toronto.
She notes the average per hour cost of home care — outside the limited provincial public offerings — runs between $25 and $35.
"If we’re looking at 24 hours a day, times 52 weeks, we’re looking at $300,000 a year," she says, noting even the nation’s wealthiest families would be hard-pressed to afford that cost for long.
Yet many people often want additional care to what’s paid for by the provincial government, which is limited.
"Financial awareness is key."
That’s why RBC partnered up with Elder Caring recently to raise awareness among clients and help them plan sooner than later.
"Most people want to stay in their home for as long as possible," Miller says. "We’ve all heard the expression, ‘I am only leaving feet first.’"
Elder Caring helps map out what’s needed, including potential expenses, along with whether aging in the home is feasible. While Miller has been offering this advice since the 2000s, RBC recently asked Elder Caring to help create resources for clients, and offer assessments for clients.
"Some of the resources that we’re putting out there might be great ice-breakers to start the topic," says Kaufman, noting these include tips for caring for individuals with dementia.
Other resources deal with wills, appointing an executor, powers of attorney and health care directives, all necessary parts of a complete retirement plan — even if a lot of people, surprisingly, have not done so.
Pre-COVID statistics, she notes, show that "70 per cent of Canadians don’t have a power of attorney for property, and that’s an alarming number when you consider the risk of not having that is going to court to get a guardianship or substitute decision-maker appointment."
That can be "an arduous process" to say the least, she adds. Not to mention the absence of these documents will cause major headaches for loved ones trying to sort out your affairs after you’re dead, or in the event that you are in such poor mental and physical health you cannot make decisions for yourself.
Beyond legal documents is planning for potential home modifications that allow for safe aging in place.
"I call it solving ‘the big modify or move dilemma,’" says occupational therapist Marnie Courage, chief executive officer (CEO) of Enabling Access Inc. in Winnipeg.
Courage specializes in assisting people with disabilities and aging individuals determine what modifications might be required to their home to allow them to live there for as long, and safely, as possible.
"Costs can range," she adds.
Installing railing in the bathroom and on the steps outside the home to prevent falls might cost a few hundred dollars. But building an accessible bathroom on the main floor can run into the tens of thousands of dollars.
As with any planning, Courage suggests thinking about modifications long before they are needed. This makes absorbing costs easier. Not to mention, your abode is more accessible to others — including aging parents, she says.
"Learn more about what’s needed and start thinking about making those changes now — not 10 years from today."
Making changes to the home or moving to assisted living: these decisions become more difficult and more costly during a crisis, Miller adds.
"That’s why we want to get people thinking about these decisions sooner than later so they can make an informed choice."