Why long-term care planning isn't just an inflation-era problem

Increasing healthcare costs are just one facet Canadians must consider for their vulnerable old age, says portfolio manager

Why long-term care planning isn't just an inflation-era problem

Over the past two years, mounting challenges in affordability have made life especially taxing for members of the sandwich generation. On top of higher costs of shelter and everyday necessities, they’re processing the impact of inflation on their ability to provide care for their vulnerable and aging loved ones. 

As an advisor focused on long-term care planning, Neela White is finely attuned to the ramifications of healthcare, long-term care, cost of medications not covered under OHIP, and retirement. And when it comes to preparing for aging, she says too many families are not properly equipped or aware of the challenges.

“Even before the increases in interest rates and inflation, healthcare was one of those sectors that consistently increased year over year, whether it was the cost of medication, the cost of care, or the cost of retirement living,” White, senior portfolio manager at Blue Wing Advisory Group with Raymond James Ltd., told Wealth Professional.

Financial costs: just the tip of the iceberg

According to White, clients generally rely on Canada’s healthcare system to support their loved ones’ needs for treatment and medication as they age; not realizing that government assistance only goes so far, they fail to plan for crucial out-of-pocket expenses. She also finds people generally are confused about the differences between long-term care facilities and retirement facilities, the cost structures, and tend to use the terms interchangeably.

“People are shocked at the wait times for long-term care in nursing homes. One recent study I read said waitlists in Ontario could have as many as 40,000 people queued,” White says. “As a result of COVID, we’re seeing dramatic shortages of care workers and personnel across the industry.” The burnout and strain on the healthcare workers continues to trend up.

Many Canadians envision retiring and aging in their own homes, as it gives them a sense of independence, autonomy and continuity. But their ability to age in place is often limited by financial constraints. White says one 2022 study found that almost all Canadians surveyed, who were 45+, want to age at home, but only around one in eight (12%) could actually afford the personal in-home care and assistance needed to sustain that.

“Right now, care costs between $35 and $45 an hour. And the minimum booking tends to be around three hours a day,” she says.

Because blood is thicker than water, some might take it for granted that their younger relatives will be around to provide care their later years. But too often, White says those expectations are shattered when the adult son or daughter moves elsewhere, either to another town or country, to carve out their own lives or cannot afford to take the time out of their jobs or lives to take on this additional job. 

“Unfortunately, there’s a point when it’s too late to plan for these things,” she says. “When you’re lying in an ICU room because an unexpected health event occurred, and you never planned for it, it hits hard for a lot of people.”

Reframing the conversation

To avoid the headache and heartache of long-term care and medical emergencies, White urges clients to plan ahead. Aside from planning out the costs and other financial aspects of later life, she says families should seriously work to build a full-fledged health care plan.

“We all have to play Nancy Drew and do our due diligence about the potential costs of aging,” she says. “The cost of care in retirement homes can run anywhere from $5,000 to $12,000 a month. So when someone says they’re moving to a retirement home, you’ve got to ask if they’ve budgeted money to pay for that long-term stay.”

As difficult as it might be for families to discuss the realities of aging, White also emphasizes the need for transparent and early discussions. That includes preparing Powers of Attorney for both Property and Care well ahead of time.

“Accidents can occur at any time, and are not just specific for aging,” she says. “Who do you want to advocate and support your wishes if you cannot do so for yourself?”

In many cases, she says the decision to place a loved one in a nursing home happens at the eleventh hour, which means family members scramble to fill out application forms when they’re already in crisis mode. Even if they have the wherewithal to create a shortlist of nursing homes that are close by, White says that leaves out other critical information such as their reputation, how they’re set up, the specific types of lodging and amenities available.

“Nobody wants to be a burden to their families. But if you ask them what they mean by that, a lot of people don’t have a clear answer,” White says. “I think it’s important to normalize these discussions and reframe the conversation. … Instead of fixating on that idea of frailty, let’s provide everyone including ourselves empowerment from looking at our options and making sure everyone’s informed about those.”