This article was originally published on the RBC Wealth Management content hub.
The coronavirus has hit Canada’s elderly population particularly hard, especially those in long-term care homes. A recent study from the Canadian military exposed inadequate conditions at a handful of long-term care facilities, prompting calls for more resources to provide better service to them, as well as support and training for staff.
The pandemic has put Canada’s entire health-care system under enormous strain, exposing gaps that are expected to widen as the Baby Boomer generation continues to age.
According to the National Institute on Ageing (NIA) at Ryerson University, the number of Canadians over age 85 is expected to grow from 844,000 today to 2.6 million by 2050. RBC research also shows one-in-four Baby Boomers will be living in a nursing or retirement home by age 85. Spending on long-term care is expected to more than triple from $22 billion today to $71 billion by 2050, according to NIA research.
It’s eye-opening forecasts like these, and current impacts from COVID-19, that are prompting many Canadians to consider how and where they’ll grow old and who will take care of them.
“The pandemic has been a reality check for a lot of people — forcing them to have difficult conversations they might not otherwise have had,” says Leanne Kaufman, president and CEO of RBC Royal Trust, a division of RBC Wealth Management.
RBC Royal Trust and the NIA recently formed a partnership to help Canadians prepare for the financial and health issues that will challenge them in their later years. The partnership includes providing timely research on Canada’s aging population and the expertise of RBC Royal Trust on customized estate and trust solutions for families that wish to protect their assets and transfer their wealth to the next generation.
“COVID-19 is a wake-up call for all Canadians to prepare or update their personal and financial affairs,” Kaufman says. “This partnership will enhance our ongoing mission to educate Canadians of all ages on the need for sound, long-term financial planning.”
The Importance of Advanced-Care Planning
Before COVID-19, research from the NIA showed a need for older Canadians to secure their futures against unexpected shocks to health and finances.
The NIA’s National Seniors Strategy notes that a vast majority (86 per cent) of Canadians have not heard about advanced-care planning — the process where a person expresses what they wish to take place should they become incapable of consenting to or refusing treatment or personal care.
The NIA analysis also showed 80 per cent of Canadians had no written plan, and less than 50 per cent have had a conversation with a trusted family member or friend about their preferred health care treatments should they unexpectedly become incapacitated.
RBC Wealth Management research also shows that 71 per cent of Canadian adults don’t have a signed power of attorney (POA) to enable responsive, planned action by a trusted individual in cases of personal emergency.
Where to Start with Advanced-Care Planning
Canadians looking to create or update their advanced-care plans should begin by considering “what matters most,” says Dr. Samir Sinha, the NIA’s director of health policy research. For instance, do you want to be cared for in your own home or go to a long-term-care facility?
And don’t wait for an illness to start planning it, including how to pay for it, says Dr. Sinha, who is also director of geriatrics at Toronto’s Sinai Health System and University Health Network.
“You need to ask these questions earlier, while you’re healthy,” he says, noting that Canadians often do a better job of looking at their financial wishes in an estate plan than they do their health wishes in an advanced-care plan.
“It’s about respecting peoples’ rights and preserving their autonomy when they might not be able to speak for themselves,” Dr. Sinha says. “Planning ahead when you’re well enough is not only healthy, but more empowering.”
Advanced-Care is Part of Holistic Planning
For advanced-care planning to be effective, it needs to be part of a larger financial planning conversation, Kaufman says.
“It involves both needs-based planning, including the kind of life we want to live and in what kind of setting, as well as goals-based planning, which is how we want to spend our time and money before we get to that stage in life — and hope there’s enough money to do both,” she says.
While many Canadians talk about their advanced-care and financial plans, Kaufman says not enough are acting on it.
“The important part isn’t just talking about the plan, but executing on it,” she says. “This is where sometimes we fail a little bit: We think we have good plans in place but we don’t take the extra steps such as signing the necessary documentation.”
Kaufman says the plans also need to be communicated to friends and family, so they understand your wishes, especially if you’re unable to articulate them.
“Communication is so important. It’s about talking to the people around you and who will either care for you or who will be left behind,” she says, adding that “there are consequences of doing nothing.”
For instance, Kaufman says not having a plan in place can leave your loved ones in the uncomfortable position of having to try to sort out your personal and/or financial affairs if you’re incapacitated or pass away — and they may be left guessing what your wishes were, or battling it out in court.
“You aren’t necessarily doing the planning for you, but for the people who will look after your affairs when you can’t,” she says.
Kaufman understands it can be a struggle for people to talk about money and what happens if they get sick or pass away.
“Both can be taboo topics,” she says. “Getting comfortable with both aspects of these planning conversations is something we need to do a better job at.”
Kaufman says the pandemic is a reminder for Canadians to have a Will, a power of attorney for property and an advanced-care plan should something unexpected happen — and to make sure it’s updated regularly.
“Every time there’s a major life event there’s probably something that’s changed,” she says. “Continue to have the conversations and keep the dialogue open.”
Use advisors for protection
Financial and legal advisors can help people sort out and document their health and financial plans, and these plans can also protect them from financial abuse. Seniors, in particular, are susceptible to fraud and scams, either by strangers or people in their own family or community.
“Having a group of advisors that are involved can be a great protection because there’s lot of people paying attention, such as a financial advisor or legal advisors,” Kaufman says. “When something looks a little bit suspicious or out of character, there’s a group of people surrounding that individual to help protect against it.”
She recommends Canadians, especially those near or in retirement, work with advisors to ensure they understand their financial goals, sources of income, how to manage their current finances, and how to detect the signs of potential financial abuse.
“This will help protect you against future vulnerability,” she says.
Lessons from the pandemic
COVID-19 has forced Canadians to have difficult conversations about family, relationships and dependency, Dr. Sinha says.
On the bright side, he says the pandemic has also taught many Canadians about how to better protect themselves, including their health and wealth, and prepare for the future.
For Dr. Sinha, that includes surrounding yourself with friends, family and community who can support you with small but important things, like getting groceries if you are unable, or to avoid isolation which can lead to health issues such as depression.
“It’s not just about money, but who’s in your community to help you,” Dr. Sinha says.
“The pandemic has really awakened us to the fact that we’re all in this together. If anything positive comes out of this, it’s the opportunity to think about what the future can hold before and after we pass away and how to plan for it in a way that helps us feel more certain, and brings more certainty to our loved ones as well.”
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