Long term health care should be part of your retirement planning

By Duane Esakin

Think about your retirement years: walking along a beach, perfectly hitting a golf ball, exploring ruins in an exotic land, playing with your grandchildren. Thoughtful retirement planning can bring a smile to your face.

We’re spending more time and putting in more effort to put away more money to ensure our golden years are ideal. It’s our reward for decades of hard work. Canadians are living longer than ever before, and in general, our early retirement years are usually healthy ones. In later years, however, illnesses seem to occur with greater frequency. They can lead to an increasing dependency on others for assistance with the activities of daily living.

Many helpful and necessary services are not covered adequately, if at all, by provincial medicare programs. The costs of in-home care are high, but the costs of a long term residential care facility can be even higher, depending on the care that you need and want.

Government help limited
What would happen, for example, if you had an accident and had to hire caregivers to assist you daily? Statistics show government home care spending reached $3.4 billion in 2003-04, an average annual increase of over nine per cent from 1994-95. Even so 65 per cent of adults who needed help with eating, bathing or dressing did not receive government-subsidized home care. Home care can quickly become a costly venture.

Or, what if you had to spend extensive time in a nursing home or other long term care facility? Accommodation in a long term care facility can cost from $800 to over $5,000 per month depending on the type of room and the level of government funding available.  Such costs can quickly mount up, and can erode or destroy your financial security. by draining your RRSPs and other retirement investments.

Unfortunately, serious illnesses and accidents can happen at any time. Consider these facts:

One in four people in Canada will suffer from heart disease or stroke.

Over 80 per cent of heart attack patients who are admitted to hospital survive.

60 per cent of stroke survivors in Canada will be left with a disability.

Many Canadians experience – and survive – heart attacks, strokes, cancer, and other serious illnesses that change their ability to cope, physically and mentally. In many cases, they can’t return to work right away. Short- and long-term disability insurance can cover some of the expenses resulting from illness and accident. But not everyone has that kind of insurance, or they will lose the coverage if they leave their current job.

Preserve your independence
Long-term care insurance can be of immense value in helping you to preserve your independence and freedom of choice of care in later years. If you don’t already have one, you should consider including one of these policies as part of your overall retirement strategy. When you have a long-term care insurance policy, you own it. Unlike short- or long-term disability insurance, you won’t lose your coverage if you find new employment or retire.

Even if you haven’t reached the age of 50, 40, or even 30, you should start thinking about your long term health care. It’s better to start paying for long term care insurance when you’re younger, because your premiums can be less expensive. Also, you should apply when you’re healthy, because you may not be eligible for health insurance in the future.

Duane Esakin is financial adviser with Sunlife Financial Services.

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