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Health-care costs need to be top of mind during retirement planning

"Planning financially for retirement requires taking many uncertainties into consideration. One of the greatest is the cost of health care.

Although some health-care costs are covered in Canada, there are many – ranging from medications and massages to nursing homes or at-home care – that need to be paid out of pocket.

“It’s the most difficult part of financial planning because there’s no way to know what [someone’s] health-care needs are going to be in the future,” says Rona Birenbaum, certified financial planner and founder of Toronto-based fee-for-service financial-planning firm Caring for Clients.

Health care is the biggest expenditure for people aged 65 and older, according to a 2018 Healthcare of Ontario Pension Plan study. That report cites a Canadian Life and Health Insurance Association Inc. (CLHIA) survey from 2016, which found that almost three-quarters of Canadians have made no provision for long-term care (LTC) costs in their retirement planning.

It’s also becoming less common for employers to have a benefit plan in place for retirees, according to a CLHIA spokesperson. Retirees can buy individual extended health-care plans as well as LTC or critical illness (CI) insurance, but experts note the costs go up considerably the older we get."


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