More Canadians are rethinking where they want to live in their old age after seeing the devastating impact the COVID-19 pandemic had on seniors’ living facilities across the country.
The Canadian Institute for Health Information published a report in March that found COVID-19 affected retirement and long-term care homes disproportionately in the first six months of the pandemic, accounting for 69 per cent of all COVID-19 deaths.
As a result, a survey released last autumn by the National Institute on Ageing at Ryerson University shows that almost seven in 10 respondents aged 65 and over prefer to age in their home – and have health care professionals come to them – in light of the pandemic’s impact on seniors’ living facilities.
“Considering we had to send in the armed forces into retirement homes in Canada and … the highest reported COVID-19 deaths took place in these facilities, that prompted a lot of ‘Where am I going to go, and what can I afford?’ discussions with advisors,” says Tiffany Harding, vice-president and head of wealth planning at Gluskin Sheff + Associates Inc. in Toronto.
As such, retirement planning isn’t just about preparing for travel, golf and spoiling the grandchildren, says Ms. Harding, who was previously a board member for Elder Abuse Prevention Ontario. She adds that advisors need to ensure that the possibility of needing long-term care services – either in a facility or at home – should be part of every client’s retirement plan.
“As [financial] planners, it’s incumbent on us to start the conversation about planning for worst-case scenarios that may require additional care and figuring out what assets are available to pay for it,” Ms. Harding says.
While advisors typically bring up the challenging topic with clients, Ms. Harding says the pandemic has prompted more clients to start the conversation themselves.
Even before the pandemic, many Canadians preferred to age at home as long as possible. Still, too often, planning for it has been piecemeal and takes place amid an emergency, experts say.
An example is if one aging parent falls and requires hospitalization for several weeks, leaving family members scrambling to care for the other, who may have dementia, at home.
“There’s the problem in technicolor because who is taking care of dad?” says Susan Hyatt, co-founder and chief executive officer of Silver Sherpa, which provides consultation, planning and support services to help clients of advisors age in place.
While provincial governments have aging in place policies and publicly funded home care services, these are more bare-bones than people realize, Ms. Hyatt says.
“You’re lucky in the Greater Toronto Area if you can get six to seven hours of government-funded home care per week,” she says.
These services generally involve fees based on the individual’s income. People looking for more robust care need to rely on private sector services where, in Toronto, for example, it costs an average of $35 an hour, or $840 for 24-hour attendant care, Ms. Hyatt says.
If the need for this care is long-term, the annual cost could exceed $100,000, which can quickly deplete retirement savings, she says.
Ms. Hyatt says people should start planning early for these potential problems to ensure they can afford the kind of care they want. There’s also a risk of getting sick and requiring long-term care even sooner in life.
“Thoughtful planning should be going on in your 40s and 50s because life happens,” Ms. Hyatt says.
Advisors can help clients figure out how to fund the high cost of aging in place by determining what assets they have and may need to sell.
Tax and financial planning expert Evelyn Jacks, president of the Knowledge Bureau Inc., which offers advanced wealth planning training for advisors, says many high-net-worth people are considering selling vacation properties to pay for costs they might incur in the future, such as hiring a private nurse, or 24-hour attendant care.
“The pandemic has been the trigger,” she says, adding that some are trading the snowbird lifestyle and vacation home “to get a financial insurance policy of sorts for the caregiving they may need.”
There are also tax planning considerations that advisors need to discuss with clients, Ms. Jacks says. An example is whether it’s possible to buy a life insurance policy with a tax-exempt cash value and critical illness provisions that can help pay for the cost of aging in place.
“There is just this real need for a holistic discussion about tax credits, insurance and tax-exempt assets like the [tax-free savings account] and principal residence to do this right,” she says.
Ms. Harding of Gluskin Sheff says tax-planning discussions should happen alongside estate planning, which includes appointing a power of attorney and living will.
These two considerations are fundamental for a successful aging in place strategy, she says, given that some individuals may lose the capacity to make financial and care decisions themselves at some point.
Bringing family members, often adult children, into discussions is important, so they are aware of aging parents’ wishes for care, Ms. Harding says.
“As an adult child, having that burden of not knowing what a loved one wants makes those decisions for care that much more difficult,” she says.