Consider what you want
One of the biggest issues for Canadians is that they continue to leave their choices on aging to the last minute. This winds up putting strain on loved ones, both financially and physically, says MacDonald.
Today, most of the care for aging loved ones goes to unpaid caregivers. These caregivers end up reducing work hours and reducing their own retirement income in the process, according to the National Seniors Strategy, a team dedicated to evidence-based strategies for the “evolution” of senior living.
"Although it can be a difficult conversation, it's an important discussion to have with loved ones," says Sharon Ranalli, vice-president of marketing and communications for Mississauga, Ont.-based Chartwell Retirement Residences.
More from MoneyWise
- If you moved to Canada or left Canada, you may be missing out on retirement benefits
- OAS? CPP? GIS? Breaking down Canada’s alphabet soup of retirement benefits
- What to do about women’s retirement income gap
"It ensures a parent's wishes are respected and they can live their later years with as much choice, freedom, and independence as possible."
So what do you want as you age? Do you want home care, or to live in a retirement residence? At what point should that happen? And of course, how will it be paid for? These are important questions to consider well before you're met with a crisis.
"It also allows time to do some research and speak with a financial professional about strategies and options before having to make an urgent decision that may not be the best fit for a loved one's needs and preferences," says Ranalli.
Improve your financial well-being
How to afford your ideal care
Once you have that meeting with your financial advisor, MacDonald says it's important to remember you need to go beyond your standard of living. Especially since care for seniors in Canada is not part of universal health care in the Canada Health Act. Instead, Canadians must rely on provincial services.
As Canadians age, while some costs may go down, others may go up if, for example, you need help at home, or need a retirement or long-term care home. No matter what you choose, there are certainly ways to save and create funds to support the lifestyle you want.
"Often, seniors and their families are surprised to learn that living in their current situation is anything but free," says Ranalli. "Should a senior need higher care, which could be eight hours of in-home nursing per day, five days a week, 52 weeks a year, that is almost $125,000 [per year]."
Whether it's in-home care or a retirement home, Canadians can use the sale of their home or other assets to invest in a low-risk portfolio, Ranalli suggests. Again an important reason to meet with a financial advisor.
But one of the biggest mistakes Canadians make is also taking out their Canadian Pension Plan (CPP) cash too soon, MacDonald says. By delaying the start of your CPP benefits until age 70, you can double your lifetime pension.
"Canadians are actually losing about $100,000," MacDonald says. Instead, she suggests Canadians "take some of their Registered Retirement Savings Plan money … a little part of it, and delay their CPP."
It's not just aging parents any more
The pandemic changed things for Canadians, with many seniors altering their plans for how they want to age, MacDonald says. Many now want in-home care, according to surveys by the NIA. Currently, the Canadian federal government puts about 80% toward long-term care homes, and only about 20% to home-care support.
With a massive influx of baby boomers about to reach their 80s, and waiting lists continuing to grow, it's important for Canadians to start having these conversations.
"We know many find it difficult to switch from a lifetime devoted to saving their money to spending it on themselves, even for care and lifestyle options that can make their life easier and more comfortable," Ranalli says. "We understand many older adults want to conserve as much of their savings as possible to pass on a nest egg to their children."
However, times have changed since families of 14 kids were around to support aging parents. Now, MacDonald says the focus should be on financial self-reliance. And that's still difficult for Canadians to wrap their heads around.
"You're planning for a more vulnerable future self," MacDonald says. "It's really hard for people to financially plan really far into the future … we just aren't hardwired to think of … things happening to us."
You're 5 minutes away from the best mortgage
Searching for your perfect mortgage shouldn’t be hard.
Homewise is an online brokerage that will negotiate on your behalf with more than 30 big banks and other lenders, completely free, and it only takes five minutes to apply.
If you're in the market for a new mortgage, or if you're looking to refinance before interest rates rise again, go to Homewise now and answer a few simple questions to get started.