Retirees have three dominant concerns:
- Outliving their money
- Spending it all on long term care
- Being a burden on their families (physical care-giving and financial support)
The following statistics point out some financial impacts of health impairment events.
- 4/10 Canadian who have had a serious health event or diagnosis experienced financial hardship1
- 56% of them used credit cards, lines of credit, personal savings, family or mortgaged homes to pay for it1
- 13% of Canadian have set aside money for healthcare2
1 Source: 2013 SunLife Canadian Health Index
2 Source: Guide to Long Term Care Insurance, CLHIA 2012
The level of care, the amount of care and the quality of that care hinges on the ability to pay for it. Comprehensive retirement income planning incorporates health risk management to:
- Reduce or eliminate the use of personal assets and income to pay for health-related risks like a critical illness or long term care when it happens.
- Protect the standard of living for both the client and the caregiver. Both parties want to preserve their dignity and their lifestyle.
- Consider how to replace capital that is used to provide cash and income to fund health care costs for survivors, children and favourite causes. This is really part of wealth transfer and you can see how the two are interconnected.
Capital preservation is a key goal of retirement planning. If capital is needed to fund extra cash and income needs, what plans are in place to replace that capital for legacies and final liabilities?