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Long-term care: stressor or peace of mind

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May 10, 2013

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In this monthly column, Brenda Hiscock endeavours to put a positive spin on personal finance by empowering readers with practical tips and good news from the financial world.

Are you concerned about the costs associated with long-term care in your golden years? Do you feel unprepared to deal with the emotional and financial impact of deteriorating health? If so, you are not alone. A recent survey discovered that 57 per cent of people worry about paying for care, 67 per cent fear deteriorating health, and 90 per cent feel that preparing for one’s own long-term care needs is the responsible thing to do.

Let’s face it, none of us want to think about getting older and being unable to care for ourselves in the future. It’s a frightening prospect. But the reality is that up to 50 per cent of us will require home or facility care in our senior years.

Our population is aging, and baby boomers — those born between 1946 and 1964 — are going to create a huge strain on our healthcare system in the not-too-distant future. Beginning in 2021, the first of the baby boomer generation will start to turn 75, at which point the demand for long-term care is expected to become even greater.

Already there are people on waiting lists, and over the past eight years the median wait times have almost tripled from 36 days to 98 days to get into a facility.

About 85 per cent of long-term care facility residents are aged 75 and over, and between 2005 and 2012 the number of Ontarians aged 75 and older increased by more than 20 per cent. According to Statistics Canada, over the next ten years Ontario’s population aged 75 and older is expected to grow by another 30 per cent. This trend will certainly increase the demand for long-term care.

What does all this mean?  Well, if you are a baby boomer, chances are that our healthcare system will be under tremendous strain by the time you reach age 75. Many people mistakenly believe that the government will take care of all the costs when they can no longer care for themselves. While the government may provide some assistance, there are limitations, and, according to Ontario’s Health Minister Deb Matthews, a trend towards income tested care is likely in the future.

For most of us, the ability to maintain a dignified quality of life without putting a lot of financial and emotional strain on our loved ones and children is very important. So what can we do to prepare?

We have three options:

1)       We can rely on the government, and hope that funds are available when we require care. This can be very stressful, both emotionally and physically.

2)      We can earmark savings that we have accumulated to pay the costs of our care. This will have a significant impact on our estates and transfer of assets to our next generation, something for which we have worked our whole lives.

3)      We can purchase long term care insurance, which will provide a regular source of funds to pay for home or facility care.  Why do people buy long term care insurance?  According to a recent survey, these are the primary reasons:

  •  80 per cent want the option of choosing where to receive care.
  •  76 per cent want control over decisions about care.
  •  75 per cent want to make sure their dignity is maintained.
  •  82 per cent do not want to be a burden on family.
  • 61 per cent wish to leave an inheritance for their children.

Your advisor can help you to create a plan to suit your needs, or you can drop me a line if you want more information. Preparation can provide you with peace of mind, and that, to me, is priceless.

 

About the Author(s)

Brenda Hiscock

Brenda Hiscock is a Certified Financial Planner, with a specialty designation in Critical Illness, Disability and Long Term Care Insurance. She works closely with individuals and business owners to help them to define and achieve their financial goals. She can reached at Brenda@guilfoylefinancial.com.

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