By Wally Chapman
When my 83-year-old dad was first diagnosed with Lewy body dementia, the second most common form of degenerative dementia after Alzheimer's, I didn't really believe it. I had seen some signs of forgetfulness, but I thought these were just symptoms of getting older.
My dad practiced orthodontics for 30 years before retiring. How could it be that he couldn't draw basic shapes, or place the hands of a clock so they showed a specific time, or answer easy questions about a simple story that was just read to him?
Sadly, a dementia diagnosis such as my dad's is on the rise. Around 78,600 new cases of dementia are diagnosed in Canada each year among those 65 years of age and older, according to Statistics Canada.
Costs of dementia can be financially devastating
And with each diagnosis, as I've learned, comes sadness, fear of the unknown and unfathomable costs. Even for people like my parents, who were in a position to save enough for a comfortable retirement, the high cost of dementia care is still burdensome. They were among the lucky ones. For many people, it can be financially devastating.
To help shine a spotlight on the rising prevalence of dementia and help families better prepare for the financial risks associated with the disease, RBC Wealth Management–U.S. commissioned a study, Prepare for the expected, the financial impact of cognitive decline, from Aon.
The study found that the overall lifetime cost of dementia could often exceed US$750,000. Prior to my father's diagnosis, I would have scoffed at that figure. But now, I understand how things can add up so quickly.
Planning for around-the-clock care
After a recent setback landed my dad in a hospital for a few days, the doctor recommended 24/7 care before my dad could be released. We had a service already set up to come to my parents' home a day or so a week, but couldn't find round-the-clock care on such short notice. Not only that, but the cost of full-time, in-home care is around US$40 an hour. Just do the math and your head will quickly start to spin!
So, my siblings, our spouses, my mom and I had a family meeting to try to figure out how we would make round-the-clock care work. Fortunately, the drug the doctor prescribed kicked in just a few days after my dad left the hospital and he regained mobility, eliminating the need for such full-time care.
However, that episode made it clear that at some point in the near future, my parents would need to find a place that would provide a combination of independent living for my mom and memory care for my dad.
Full-time care facilities can be costly
Such facilities are not only expensive, but the waiting list to get in is also extremely long. Our research brought us to that conclusion even before my dad's hospital stay.
In fact, in 2017, my parents put a down payment for a condo in a care community that had yet to be built. In addition to the cost of the condo, my mother and father each had to pay a monthly membership fee that gave them access to a broad spectrum of services offered, from routine health care to memory care to hospice. The fees ranged from US$4,000 a month for people like my mom, who are healthy when they become members, to nearly US$15,000 a month for someone like my father, who joined after being diagnosed with Lewy body dementia.
Even for families with resources and means, large expenses such as these are tough to swallow—particularly when we thought our parents would be spending their hard-earned savings during their golden years doing more of the things they loved, like travel.
By highlighting the true cost of dementia, my firm hopes to equip each of our advisors with the information they need to have proactive conversations with families about how their wealth plans can accommodate a devastating health diagnosis. Big expenses, as most people know, are easier to manage if you have planned and prepared in advance.
Even with the data in hand, I know it's not an easy conversation to have. Thinking about how you might manage costs associated with a disease you don't even know you'll get isn't something most people want to spend time on. It's not like planning for your children's education, which is also expensive but seen as a positive expense.
Why you should plan for a health crisis as part of your retirement
However, having been through this process with my father and witnessing firsthand just how big of a chunk dementia care can take out of a retirement nest egg, I'm telling anyone who'll listen that planning for a possible health issue in retirement is in their best interest.
Once we realized just how much dementia care can cost, my brother and I both purchased insurance to provide our families with some financial protection should we receive a similar diagnosis in the future. We also made sure we had current powers of attorney in place.
These conversations we had, first with ourselves and then with our families, were certainly not easy. There's a lot of emotion involved. But if there's anything I've learned on this journey with my dad, it's that good health can change in an instant. Having a thought-out plan in place—should that happen—can make a big difference for your family, not only mentally and emotionally, but also financially.
Wally Chapman is the central division director for the Private Client Group at RBC Wealth Management–U.S.
In the U.S., RBC Wealth Management operates as a division of RBC Capital Markets, LLC. In Canada, RBC Wealth Management member companies include RBC Dominion Securities Inc.*, RBC Phillips, Hager & North Investment Counsel Inc., RBC Wealth Management Financial Services Inc., RBC Global Asset Management Inc., Royal Trust Corporation of Canada and The Royal Trust Company (collectively, the “Companies").* Member-Canadian Investor Protection Fund. Each of the Companies and Royal Bank of Canada are separate corporate entities which are affiliated.
In Quebec, financial planning services are provided by RBC Wealth Management Financial Services Inc. which is licensed as a financial services firm in that province. In the rest of Canada, financial planning services are available through RBC Dominion Securities Inc.