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Health-care costs and your retirement portfolio

Health-care costs and your retirement portfolio

Here’s the question. Can your retirement portfolio withstand the future costs of health care—for either you or your aging parents? The once bountiful Canadian (Provincial) health-care dream versus the painful reality that the program has become may not add up to feelings of confidence. Especially when it comes to financing future health-care costs as increasing numbers of us contemplate retirement and what our personal retirement savings plans and portfolios can withstand.

That is the worrisome conclusion of Gail Johnson, writing in The Globe and Mail. (Health-care costs threaten even the most robust retirement portfolios, May 16, 2018). It makes for sombre reading. We want to share the story with you.

The experience of a Canadian health-care expert

Johnson wrote:

Susan Hyatt, an international health-care expert based in Oakville, Ont., was working overseas in London advising the British government seven years ago when she had to fly home to help her parents. Both live in different cities, and each was experiencing a health crisis.

Despite having taught at the faculty of medicine at the University of Toronto for many years and holding executive positions on multiple health-related boards around the world, including that of St. Michael’s Hospital in Toronto, Ms. Hyatt found herself facing an extraordinarily challenging situation.

‘It didn’t matter what I did; I could not get either one of my parents moved out of a hospital setting back into a community setting,’ she says. ‘They were both suffering from dementia and other illnesses and neither of them could go to their own homes. It took me six months.’

Who cares: The economics of caring for aging parents

This problem, far from being unusual, is endemic, according to data cited by Johnson:

  • The average length of time Canadians spend as caregivers for an elderly person who becomes ill is more than six years.
  • Nearly 30 per cent of those with parents older than 65 needing help must take time off work, sacrificing roughly 450 working hours a year.
  • Basic care at a retirement facility can run on average around $4,000 to $5,000 a month for one person. The starting point for dementia care is $7,000 a month.

Your retirement assets, however substantial, may not be enough

Even if you are fortunate enough to have accumulated substantial pre-retirement and retirement assets, the cost of health care can be daunting. All the more reason to take an analytical look at your spending habits and the potential liquidation of assets, such as second or third properties, as part of your preparation to fund increasing health-care costs. Your financial advisor can help in these matters.

Simplify your finances

Simplifying your finances is especially important when you have the acuity and energy to handle the complexity involved. Plan ahead. It can be a burden on your heirs, not to mention a significant expense, when you have to do it as your intellectual capacity deteriorates.

As Johnson reports: “Having a proper succession plan and a plan to deal with accrued tax liabilities are part of the organization of finances. So is ensuring that designated beneficiaries are in place on registered accounts, estate plans and wills to avoid future conflict.”

Conclusion: The 747s are on a final approach

Quoting Susan Hyatt again, Johnson reports: “As I say to families, the 747s are on a final approach. They are going to land, and it’s only a question of whether they’re landing this week or six months from now. You better get your ducks in a row if you’re going to be ready.”

Now is the time to speak with your financial advisor and be better prepared.

Book an appointment with me 250-787-0365 and let’s talk.

Source: Everything Retirement

Christina Clarance, Wealth Advisor at North Peace Savings and Credit Union. 

Fort St. John is a community that Christina and her family are proud to call home. Having lived in Fort St. John for 9 years, raising her children here, and having her immediate family and friends nearby, she has developed strong and steadfast roots to the region.

As Wealth Advisor, Christina is excited to have the opportunity to support members and clients with sound investment advice that will allow them to achieve their financial goals. Christina’s ability to build a foundation of trust with members allows her to gain the insights and the understanding she needs to provide financial solutions no matter what stage of life a person may be in.

Christina is a licensed Mutual Funds Advisor. Whether you are saving for education, or planning for a comfortable retirement, Christina is here to help you make sense of all the investment strategies available to you and help you to think through your simple and complex financial decisions.

North Peace Saving & Credit Union / Credential Asset Management Inc.

The information contained herein is provided for general informational purposes only and is not intended to provide, and should not be relied upon as providing, legal, accounting, tax, financial, investment or other advice, or a solicitation to buy or sell any securities. Economic and market conditions are subject to change and past performance is not indicative of future results.

Mutual funds are offered through Credential Asset Management Inc. The information contained in this email was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete and it should not be considered personal taxation advice. We are not tax advisors and we recommend that clients seek independent advice from a professional advisor on tax related matters. This email is provided as a general source of information and should not be considered personal investment advice or a solicitation to buy or sell any mutual funds.