The avenues for funding long-term retirement and living at home can be affected deeply by a decision to stay in that home.iStockPhoto / Getty Images
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Spooked by the experience older Canadians faced in long-term care homes during the pandemic, more and more clients are talking about their wish to age in place with their advisors.
A National Institute on Ageing survey conducted in 2020 found that close to 100 per cent of Canadians 65 and over said they plan to support themselves independently in their home as long as possible.
“The pandemic hit and an entire generation saw their parents and grandparents dealing with the isolation and the mental strife that comes from not having family and physical contact,” says Tony Maiorino, vice president, director, and head of RBC Wealth Management Services in Toronto. “A lot of people said, ‘I don’t want that.’”
The number of clients wanting to run the numbers on staying at home rather than eventually aging in an institution has increased significantly, advisors say. And the numbers can be eye popping.
“I don’t believe it’s understood broadly that the cost is as significant as it is,” Mr. Maiorino says.
The discussion requires a lot of back and forth with financial planners and advisors, he adds.
Mr. Maiorino points out that for clients who need to bring private 24/7 awake care into their home, it can run up to $250,000 to $300,000 a year. That assumes no support is available from a spouse or family. There are many other levels of home care less than that, of course.
But the care figure doesn’t include the maintenance or property tax or modifications to the home, he says.
“We customize the plan to as close as they’re hoping for as possible – to model that,” Mr. Maiorino says.
Brenda Hiscock, certified financial planner (CFP) at Objective Financial Partners Inc. in Markham, Ont., says she likes to cover scenarios for her clients’ individual circumstances.
“You really need them to bring it to life. What kind of support would they have? Do they need to move to a more accessible place in advance of possible future care needs?” she asks. “There’s a possibility they may need to modify their home. Are they open to that?”
She outlines three levels, one with no extra care needed at home, one with medium care and one if the client develops a condition such as Alzheimer’s, which could run for a long time. Then, the client’s financial plan is tested against those scenarios.
Getting the family involved
Ms. Hiscock adds that she likes to bring family into discussions once the generation that will be living with the plan has made some decisions.
“It tends to minimize family conflict. If you’re going to age in place, you really need to eliminate family conflict and planning helps to do that,” she says.
Aging-in-place planning requires advisors to take a deeper dive into the client’s background as well, says Caval Olson-Lepage, CFP, advisory team lead for Affinity Credit Union in Saskatoon.
For example, a good family health history may indicate a client is a good candidate for aging in place, she says.
“You want to make sure they have those strong support systems. If they don’t, there’s a cost to bring in those support systems,” such as nurses or delivered meals, Ms. Olson-Lepage says.
The avenues for funding long-term retirement and living at home can also be affected deeply by a decision to stay in that home, advisors say.
If the client isn’t going to use the sale of a home as a source of retirement income, does that change the sources of income at 55 or 75, Mr. Mairorino asks.
“Those tentacles tie into so much else as part of that retirement process,” he says. “For clients who are in their 60s and retiring, we should be looking at that immediately because it affects how we access income, how we make decisions around [retirement savings plans (RRSPs)] or when to take [the Canada Pension Plan].”
The amount of taxable income also matters for those aging in place who need to access government-funded support, advisors say.
Ms. Olson-Lepage says a financial planner can structure the financial plan to keep clients under taxable income thresholds for public programs. Tax-free savings accounts have unshackled clients from the taxable income of RRSPs and pensions, she says.
Tax credits that can help
Staying in the home may require major modifications for accessibility as clients age, and that too has to be built into the plan. But there are tax credits that can mitigate some of those expenses, Ms. Hiscock says.
The federal home accessibility tax credit has been beefed up in 2022 to allow for $20,000 in eligible expenses for the credit. Ms. Hiscock adds the medical expense tax credit is often overlooked because certain renovations qualify under that provision as well.
Extended family can get a break starting in 2023 when the multigenerational tax credit kicks in, she says. It’s available for families renovating their homes so seniors or disabled family members can live with their children.
Making sure the dollars and cents are available for aging-in-place seniors is the chief responsibility of the financial planner or advisor but wider issues are crucial for the plan to work.
“Aging at home is a beautiful concept of making my home adapt to me so I can age here as long as I need,” says Audrey Miller, founder and managing director of Elder Caring Inc. in Toronto.
“At the same time, there’s an issue of loneliness and lack of socialization. It’s not just accommodating the house and making sure there’s a bannister on the outside stairs or grab bars in the bathroom. It’s making sure the infrastructure and support of community can somehow be accessed.”
Elder Caring, a team of social workers and occupational therapists, has partnered with Royal Bank of Canada and advisors to help their clients access wider community resources.
Ms. Miller says she provides one-to-one wellness consultations with qualifying clients to address issues such as caregiver burnout, and how to access services from the public sector as well as private ones, such as reputable home health companies.
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