Five years ago, my parents' world changed when an unexpected illness left my mother needing permanent personal caregiving support at home. We scrambled, in a moment of crisis, to find trustworthy and reliable help. Planning for this kind of support, logistically or financially, was not something we'd considered in advance, while everyone was healthy. However, today, in light of our world's changing demographics, and lessons learned from the pandemic, I believe this is a planning conversation we must have with our loved ones.
Within the next decade, almost 25 percent of the Canadian population will be over the age of 65—increasing from 18.5 percent in 2022. There are a multitude of social, economic and health care system implications from this shift. Caregiving is a significant component that can have major personal finance consequences at the individual level. And while this is by no means exclusively a women's issue, there's no denying that women are disproportionately affected by the impact of both caregiving and receiving, financially and otherwise, as we age.
Caregiving responsibilities tend to fall to the women in the family. And women are more likely to step away from the workforce for caregiving-related purposes, impacting our own financial futures. Women are also more likely to be the receivers of care. We live longer than men on average: according to the latest statistics, there are 20 percent more women over 65 than there are men in Canada. There are also two women for every man in the 85-and-older population, and five women for every man over 100, according to Statistics Canada. Not surprisingly given those numbers, women also make up about two-thirds of the population of long-term care residences.
Most caregiving is unpaid and done by family members; in fact, one quarter of the Canadian population over the age of 15 identify as caregivers but many factors, such as a lack of geographic proximity, and competing time commitments, suggest family cannot be the only solution, and caregiving will need to be at least partially outsourced to professionals. Yet, the cost of care is a topic few of us know much about. By way of example, while the pandemic has made many of us wary of congregate living as we age, we also have to consider that private in-home care, 24 hours a day, could easily cost over $250,000 annually.
When planning for our retirement, we focus on the things we want to spend money on, and age-related caregiving probably doesn't hit the list of priorities. It's also difficult to truly plan for—the options, and the possible needs, are widely variable and impossible to predict. However, there are some steps we can take to focus on the things we can control.
- First: educate ourselves on the living and caregiving options that exist for our family members and for ourselves as we age.
- Second: understand the potential costs and how those might best be funded.
- Third: have a financial plan in place that has sufficient flexibility to contemplate some of these eventualities. As part of our planning, we can't forget the fundamentals of a valid Will and powers of attorney. Both are critical, but remember the vital importance of the power of attorney, particularly as we age.
Planning is powerful. So are conversations with your family about those plans—particularly when they're done thoughtfully and in advance, rather than left to a moment of crisis.
This article was originally posted in FP Investor.
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.