Dealing with the potentially high costs of informal care now can reduce headaches later

Posted on by Duane Roberts

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by TD Insurance

Personal Finance Family Finance

Planning is powerful. And that also applies to conversations with your family about those plans

Publication date:

Feb 10, 2022 • Feb 14, 2022 • 3 minute reading time • Join the conversation Informal care is an important part that can have major personal financial consequences on an individual level. Informal care is an important part that can have major personal financial consequences on an individual level. Photo by Getty Images/iStockphoto

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Five years ago, my parents’ world changed when an unexpected illness left my mother in need of permanent personal care at home. We hastened, in a moment of crisis, to find reliable and trustworthy help.

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We hadn’t considered planning for this kind of support, logistical or financial, while everyone was healthy. However, in light of the changing demographics of our world and the lessons learned from the pandemic, I believe this is a planning conversation we need to have with our loved ones.

Nearly 25 percent of Canada’s population will be over 65 in the next decade, an increase from the 18.5% this age group currently represents. This shift in the population balance has many implications for the social, economic and health care system.

Informal care is an important part that can have major personal financial consequences on an individual level. And while this is certainly not exclusively a women’s issue, there’s no denying that women are disproportionately affected by the impact of both providing and receiving care, financially and otherwise, as we age.

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Nursing responsibilities usually fall on the women in the family, and women are more likely to step down from the workforce for care-related purposes for a period of time, affecting their financial future.

Women are also more likely to be the recipients of care. On average, we live longer than men: according to the latest statistics, there are 20 percent more women over 65 than men in Canada. There are also two women for every man in the population aged 85 and older, and five women for every man over 100, according to the 2016 Census.

Given these numbers, it’s not surprising that women also make up about two-thirds of the long-term care home population.

Most care is unpaid and provided by family members. A quarter of Canada’s population over the age of 15 identifies as a caregiver, but many factors, such as a lack of geographic proximity and competing time commitments, suggest that family cannot be the only solution and that care will have to be outsourced at least in part to craftsmen.

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Yet the cost of healthcare is a topic that few of us know much about. For example, the pandemic has left many of us wary of living together as we age, but we should also remember that private, 24-hour home care can easily cost more than $250,000 a year.

When planning our retirement, we focus on the things we want to spend money on, and age-related care is probably not on the priority list. It’s also hard to really plan. The options and possible needs are highly variable and impossible to predict. However, there are some things we can do to focus on the things we can control.

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First, we need to educate ourselves about the housing and care options available to our family members and to ourselves as we age.

Second, we need to understand the potential costs and how best to finance them.

Third, we need to have a financial plan that offers enough flexibility to consider some of these eventualities.

As part of our planning, we must not forget the basics of a valid will and power of attorney. Both are critical, but remember the vital importance of the power of attorney, especially as we get older.

Planning is powerful. And so do conversations with your family about those plans, especially when they’re thought out and done ahead of time, rather than left to a moment of crisis.

Leanne Kaufman is chief executive at RBC Royal Trust†

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