As the pandemic continues, Canadians consider health and long-term care a key retirement priority but haven’t taken meaningful steps to plan for itA new study from Edward Jones reveals that a majority of Canadians admit to having limited or no understanding of the health and long-term care options and costs they should be saving for in order to live well in retirement.
MISSISSAUGA, ON, May 11, 2021 /CNW/ – Just over a year into the COVID-19 pandemic, new survey results from Edward Jones reveal that Canada’s aging population has a renewed awareness of the importance of health and long-term care planning – but the majority don’t have a plan or aren’t having intentional conversations with their family on this critical topic.
In total, 61 per cent of Canadians consider health and long-term care a key retirement priority, which ranked second to taking care of basic needs. However, a greater majority, 66 per cent, admit to having limited or no understanding of the health and long-term care options and costs they should be saving for in order to live well in retirement. This includes 59 per cent of those aged 55 or over – the sample of respondents closest to retirement.
High Costs Are A Barrier For Canadians
The topic of health and long-term care has been gaining momentum over the last number of years as Canada’s aging population and increasing life expectancy are putting an unprecedented strain on the healthcare system. In fact, the National Institute on Aging (NIA) projects long-term care costs will more than triple within 30 years, from $22B today to $71B by 2050.
For Canadians needing long-term care, the costs can be steep. Research commissioned by Edward Jones found that, although each province sets its own costs based on a patchwork of options and related prices, the average national cost of a private room in a long-term care home is $33,349 per year. Within this national average, costs can vary significantly between provinces, and between cities.
For those preferring and able to continue to live in their own homes while relying on long-term care support, the range of costs can be even wider, depending on variables such as the need for home alterations, the type of care needed, and the number of care hours needed per month. However, the basic cost of personal care is around $30 per hour on average. These costs have all increased at a rate of 4 per cent per year over the last decade and are expected to continue to grow at a similar rate moving forward.
Long Term Preparedness
“This survey is telling us that most Canadians realize long-term care is an important part of retirement planning, but they aren’t taking the necessary steps to put that plan in place,” said David Gunn, President of Edward Jones Canada. “The key to living well in each stage of life and retirement is to have a financial strategy that accounts for changes in your health – before they happen. This empowers you to have health care options in place that support your lifestyle rather than make unexpected compromises due to unplanned expenses.”
The study also explored how long Canadians believe their retirement savings will last, and found that currently, Canadians’ retirement savings are not likely to withstand the costs of long-term care later in life. By their own assessment, 23 per cent of Canadians believe their retirement savings will last them less than 10 years, including 21 per cent of those aged 55 or over. An additional 31 per cent of respondents don’t know how long their retirement savings will last them, including 24 per cent of those aged 55 and over.
This is particularly concerning as the average “healthspan” of Canadians does not match their lifespan. According to previous research Edward Jones conducted with Age Wave, Canadians live with poor health for an average of nine years and will rely on the health and long-term care system more heavily during this period. Based on the data, this is a cost many Canadians are not accounting for.
Pandemic Isn’t Enough For Canadians To Take Action
The discussion of long-term care has become more prominent during the pandemic, with the conditions in long-term care facilities concerning many Canadians. However, the pandemic has not yet resulted in meaningful conversations on the topic, as only 29 per cent of Canadians have discussed a health and long-term plan with their partner or family. Of those aged 55 or older that have not discussed their plans with their partner or family, 22 per cent said it is not something they like to think about, while another 23 don’t believe health and long-term care plans will apply to them.
“When we discuss retirement with our friends and family, we often talk about the freedom we will have to do the things we love with the people we love,” said Gunn. “Health and long-term care is often an afterthought, but it shouldn’t be. Involving your partner and family in your long-term care discussions and planning is an important step to help ensure you are well-supported, come what may. A trusted financial advisor can help you create a thoughtful plan that helps reduce stress and worry, accounts for all your preferences over time and can also help facilitate these more difficult conversations with your immediate and extended family members.”
An online survey of 1,523 Canadians was completed between March 26 and 28, 2021, using Leger’s online panel. No margin of error can be associated with a non-probability sample. For comparative purposes, though, a probability sample of 1,523 respondents would have a margin of error of ±2.5%, 19 times out of 20.
About Edward Jones
Edward Jones is a full-service investment dealer with more than 850 financial advisors in Canadian communities from coast-to-coast. A member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund, the firm is also a participating organization in the Toronto Stock Exchange. Edward Jones is a proud supporter of partners in the health and wellness space such as The Terry Fox Foundation, whose mission supports initiatives positively impacting cancer research. For more information, visit edwardjones.ca.