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New report calls for a publicly funded insurance system, like EI, for long-term care
· CBC Radio ·
Canadians in their 30s and 40s are figuring out how to support their parents as they retire, but feeling financially stuck about how to plan for their own old age, says one financial adviser.
“The anxiety at three in the morning is very real,” said Shannon Lee Simmons, a certified financial planner and the founder of the New School of Finance.
“I definitely think they’re thinking about it, but the cost of living is so high, and I don’t know that anyone feels like they can really … put enough money towards it at this age,” she told The Current’s Matt Galloway.
“There’s so many bigger fish to fry in the short run.”
A new report from the National Institute on Ageing (NIA) suggests that a publicly funded long-term care insurance program could ease those financial fears. One possible model — similar to employment insurance — would involve Canadians paying into the system during their working lives, in order to access that safety net in retirement.
One of the study’s authors, Dr. Samir Sinha, said that increased life expectancy in Canada is leading to increased costs that many people aren’t prepared for.
“The average Canadian making it to 65 years of age now is going to have 22 years of life expectancy,” said Sinha, director of geriatrics at Sinai Health and the University Health Network in Toronto.
“About 17 of those years are going to be in good health, that’s the good news. The last five years, it could be those years that we need extra help,” he said.
Each province and territory runs its own programs for elder care, but services funded by those governments might be limited, or require co-pays — and long-term care is not part of Canada’s universal health system, he explained.
“If you need a nursing home, if you need more than a few hours a day of home care, you’re paying out of pocket for that … quite a few thousand dollars a month,” he said.
The NIA’s report looked at how LTC insurance programs already work in countries like Germany, Japan and the Netherlands, which has had a system in place since 1968. It found that some countries fund their program through wage deductions, but are flexible about how the eventual payout is used.
“You can use it for care at home. You can use it for care in a long-term care home. You can use it to pay family members and friends to care for you,” said Sinha.
Sinha said that flexibility has become more important to people since the pandemic shone a spotlight on the crisis in Canada’s long-term care home system.
“I think the pandemic has really outlined a lot of painful realities that, you know, aging is a triumph, but it’s a challenge and an opportunity,” he said.
“I think this is one of those opportunities to allow us to have more control about how we actually want to age in the right place for us.”
Retirement planning, in a cost-of-living crisis
Simmons said the spectre of retirement costs is “anxiety-inducing across all generations, but in different ways.”
When she works with clients who are retired or approaching retirement, they are concerned about how to pay for care they might soon need. Her younger clients — around the 40-years-of-age mark — are worried about helping their parents, while also keenly aware that the economic landscape has shifted.
Younger Canadians are often thinking, “Well, my parents, they had a house, they had a job, they had the social security net, and I don’t have that. So what does that mean for me?” she said.
“[There] could be some pushback on it, like, ‘Well, how am I going to pay rent next month if I have to pay into this new program?'” she said.
People might also have concerns about whether such a program would survive changes in government over the longer term, or more existential threats such as climate change, she said.
But Simmons suggested the issue needs to be looked at through a “long-game lens.”
“I do think that there is an appetite to quell anxiety that could be strong enough to make the case that, yes, … this feels frustrating in the moment,” she said.
“But I’m happy that one of those pieces of my long-term puzzle is being figured out on a grandiose scale.”
Sinha thinks that the fact many people are living paycheque to paycheque is even more reason to explore the idea.
“If we can pool the risk in an affordable way so that down the road, this is one less thing that we have to stay up worrying about at night, then this is something that we should strongly consider,” he said.
“Especially for these younger generations that are really facing increasing cost-of-living crises.”