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rob carrick

The most ignored aspect of retirement planning just might be that women live longer than men.

Among people aged 65, just over half are female. At 75 years of age, 57 per cent are female. At 85 years old, 68 per cent are women. These numbers were provided by Kristina Hidas of the Healthcare of Ontario Pension Plan (HOOPP), which has just completed some research showing one way in which the longer lifespans of women matter hugely in retirement planning.

It's spending on health-related costs not covered by provincial health-care plans.

Because they live longer, women should expect to pay a lot more in their retirement years for long-term care, home care and other costs like dental care and drugs not covered by provincial programs. "Women are the most vulnerable group," said Ms. Hidas, HOOPP's senior manager of strategic research. "They live longer, and they mostly live by themselves."

The study by HOOPP (full disclosure: my wife is a member) was commissioned to look into the effect that health-care costs have on retirement income. To summarize concisely, the impact is huge. People who start retirement in good shape financially might find themselves with insufficient income if they need long-term care later on.

Everyone should think more about paying for health care in retirement, but especially women. Whether married or single, they need to plan for the likelihood that they will spend more of their lives than men at a stage where out-of-pocket health-care expenses are a big issue.

HOOPP's research team looked both at household spending patterns and at existing academic research on retirement security and health spending in Canada. One of the findings is that health-related spending as a percentage of income has been rising steadily since the late 1990s and, in the years after age 65, becomes a bigger expenditure on average than anything else. Health-care costs may be modest or even nothing at first, but they can gradually ramp higher through expenses like living in a long-term care home or receiving home care.

The HOOPP study takes these findings and applies them to the question of whether retirees will have enough income to cover their needs. One key trend noted in the study is that both men and women tend to be in good shape in early retirement. It's in the 80 to 85 age range that financial stress starts to build, particularly for women. "Even at 75, health care isn't a critical cost compared to 85," Ms. Hidas said.

The cost of long-term care in particular tells the story. HOOPP's research found that government-run nursing homes can cost $25,000 to $40,000 a year, while private assisted-living facilities might run $40,000 to $100,000 and home care plus related expenses like nursing could cost $35,000 annually.

At age 85, 26.5 per cent of the men who don't require long-term care have incomes that HOOPP considered to be inadequate (less than 50 per cent of working-age salary). For those requiring long-term care, the portion of men with inadequate incomes rises to 34.7 per cent. One-quarter of women have inadequate incomes before long-term care, and 44 per cent are in that position after they incur this expense.

The study also found that women are much more likely to live in nursing homes and seniors' residences than men. At 85 and older, 14.1 per cent of women and 8.6 per cent of men live in a nursing home, while 17.1 per cent of women and 9.8 per cent of men live in a seniors' residence. HOOPP's Ms. Hidas said older men have a better chance of receiving care from a spouse than older women and thus don't need institutional care as much. Women in retirement, often living alone, have no such support.

HOOPP's study refers to a 2016 Canadian Life and Health Insurance Association survey that indicates nearly 75 per cent of people have made no accounting for long-term care costs in their retirement planning. Governments need to worry about this because people strapped for money may neglect their medical needs and put a greater burden on the public health care system. Future retirees also need to consider how they'll afford health care costs, notably women.