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Real Case Study #3 Planning for the Unexpected Costs of Care Thumbnail

Real Case Study #3 Planning for the Unexpected Costs of Care

Most Plans we build have, until recently, neglected to adequately include contingencies for care costs.

While almost all of them include similar themes like retirement income goals, wishes to help kids and grandkids, travel passions and other neat things, almost none volunteer an interest on preparing for the need for one or both people to have care, though care can be very expensive.

Not anymore.

Today, whether asked for or not, a standard feature of a Plan is a ‘fire drill’ for what will happen if one or both persons in the Plan need to pay for unexpected care needs. These needs often necessitate the maintenance of two households. Almost nobody voluntarily puts this on their goals or milestones list. It’s kind of a NIMBY thing: not in my backyard!

This writer has just (2019) concluded 20 years as a caregiver to two parents. The final tally on care costs over that period exceeded one million dollars. The combination of private retirement living, ‘memory care' and accommodation for two people, non-OHIP fees, medications, ancillary costs and finally long -term care all combined to unexpectedly and greatly erode carefully planned investment portfolios and estate planning. This is an exceptional case, but costs like these are no longer an exception.

Care costs are real, more than most people are aware of and are increasing. All against the backdrop of Baby Boomers (1946-1964) now retiring and aging in numbers TWICE as big as any previous cohort in history. And, medical advances have had great success. Former significant illnesses are no longer catastrophic or ‘successful’; heart disease, cancer and stroke don’t kill now. We now have what’s known as a longevity bonus: on average we’re living ten years longer. Except, they’re not often great years. And on many occasions, they’re costly years.

Planning for care is now an essential part of every Plan we craft.

Peter Fraser  

Certified Financial Planner