Aging at home is the preferred choice for most Canadians, and as people live longer, the need for comprehensive financial planning becomes critical to making this option viable. The federal government is considering an age-at-home benefit as part of 20 recommendations from the National Seniors Council, but experts emphasize that saving and planning ahead are essential.
Christine Van Cauwenberghe, head of financial planning at IG Wealth Management in Winnipeg, notes that many clients are interested in discussing what it takes to age at home, though these conversations often happen too late in the financial planning process.
The federal government’s expert panel has proposed an age-at-home benefit, which would be income-based and require an assessment by a qualified practitioner. This benefit could cover services like health care, personal care, and domestic tasks. Additionally, the panel recommended making the $1,250 Canada caregiver credit refundable and increasing the guaranteed income supplement for seniors. However, these measures alone may not suffice. The Conference Board of Canada reports that Canadians aged 65 and older spend an average of $12,000 annually out-of-pocket on health care, with these costs expected to rise significantly.
For most Canadians, the desire to age at home is strong. A 2020 survey by the National Institute on Ageing and the Canadian Medical Association found that 96 percent of Canadians aged 65 and older would do everything possible to avoid long-term care facilities.
Van Cauwenberghe categorizes retirement into three phases: the go-go phase, the slow-go phase, and the no-go phase. She emphasizes the importance of planning for the later phases, which may involve considering long-term care insurance or other ways to fund private in-home care, which can vary widely in cost depending on the province.
Jillian Bryan, a senior portfolio manager and investment advisor with TD Wealth in Vancouver, points out that Old Age Security alone is insufficient to support most Canadians’ vision of aging at home. Tax-efficient investments, such as mutual funds with return of capital distributions, can be a conservative way to generate income without incurring high taxes. Bryan also suggests considering insurance options, including critical care insurance, which can provide significant financial support in the event of serious illness.
Downsizing to a smaller home might be a practical way to fund aging at home, but financial planner Ngoc Day of Macdonald Shymko and Co. in Vancouver warns that it’s not always the best choice. Some people find joy in their long-time homes and gardens, making downsizing a less appealing option. Aging at home may also require costly renovations, such as adding a bedroom and bathroom on the main floor or installing a ramp, which requires careful financial planning to avoid debt.
Overall, the key to successfully aging at home lies in early and comprehensive financial planning, ensuring that individuals can maintain their preferred lifestyle as they age.
