As we age, it can become more and more challenging to live independently. Many Canadian seniors need help with their day-to-day lives, whether that comes from family and friends, in-home support workers or staff at a live-in care facility.
A popular option is aging in place, defined as living in one’s own home and community rather than moving into long-term care (LTC). In fact, according to 2021 data from the Canadian Medical Association (CMA), 96 per cent of older Canadians surveyed said they “would do everything possible to avoid going into a LTC home.”
But aging in place successfully means understanding the financial implications. “The majority of people underestimate the amount of care they will need and the number of years they will live,” says Arash Rabie, Senior Financial Planner for MD Financial Management. “They also underestimate the costs that they may face in retirement.”
So what are the real costs of aging in place in Canada, and how can you plan for them? Here are some things to think about.
Housing considerations
Whether you stay in your current home or downsize, there’s a good chance you’ll want to do some remodelling to future-proof the space. Examples include an elevator to easily move from floor to floor, or bathroom renos that add an accessible shower, seating space and grab rails. While costs vary depending on the specifics1, some numbers to start with:
- $35,000 for a home elevator
- $10,000 to $12,000 for a walk-in shower
- $100,000 to $250,000 for an outdoor lift
Regular maintenance and repairs need to be budgeted for, too. Think of all the tasks you do to keep your house running: everything from shovelling snow and changing furnace filters to bigger updates like replacing the roof or hot water tank.
There’s also the cost of professional assistance: in-home caregiving and healthcare services like meal prep, cleaning and bathing support — even the little things, like having someone come in to cut your nails or hair.
The costs of all of these will depend on where you live, what you need and when you need to pay for it, and how many hours of support per week you need.
Of course, with inflation and high demand for support workers, costs are likely to go up over time. And some kinds of support workers such as nurses can cost more, Rabie notes. “It depends on the nature of the help,” he says.
Healthcare expenses
We’re lucky to live in a country where so many of our healthcare needs are publicly funded. Unfortunately, some healthcare costs must be paid for out-of-pocket: think dental care, prescription drugs and services like massage and physiotherapy, as well as medical equipment and assistive devices.
Depending on your income and where you live, you might get government assistance for some of these costs. For example, the Fair PharmaCare plan in British Columbia offers financial support to help eligible residents pay for prescription drugs, dispensing fees and some medical devices and supplies.
Eligible seniors can also now apply for the new Canadian Dental Care Plan.
If you don’t have extended health insurance from a previous employer, you can also consider purchasing private insurance to help cover healthcare costs, though some experts doubt whether the benefits are worth the cost. As for long-term care insurance, it can be tough to weigh the pros and cons. It’s worth speaking with your financial advisor about whether it would work for your situation.
Other costs to consider
Health care and housing are only two categories to look at when budgeting for aging in place. There are other costs too, such as:
- transportation costs, should you not be able to or not want to drive
- costs for social and recreational activities
- nutrition support, such as Meals on Wheels
- financial planning support, such as doing taxes and administering corporations or pension plans
Generally, says Rabie, as people go through their retirement years the costs for health care and home support will go up while other living expenses, such as travel and entertainment, go down.
Aging in place vs. assisted living costs
Is aging in place more or less expensive than assisted living? The answer, of course, is it depends.
But one major factor is how much support you need to stay in your home. One estimate from the Canadian Medical Association is that it takes 22 hours per week of in-home care to keep patients at home rather than in LTC2 — which works out to a minimum of $3,500 per month (and probably much more).
As for long-term care costs, they vary based on province or territory and type of accommodation. In Alberta, for instance, monthly fees for nursing homes are in the $2,000 range, while retirement homes (which are privately owned) can cost between $1,200 and $6,200 per month.
Rabie points out that while many people are apprehensive about moving into an assisted living facility, there can be benefits beyond the financial. One of his clients, he says, had lost his friends and family members and was quite isolated. After moving into a retirement home, things changed for the better. “He was more optimistic about life.”
Financial planning for aging in place
When it comes to creating a realistic budget, says Rabie, the first step is to be clear about the reasons you want to age in place. Think about what you want your life to look like and the support you’d want to have when you need it. If you believe you’ll have assistance from family members, he cautions, it’s important to have that conversation ahead of time rather than assuming. “We ask clients to talk with their family members to make sure they can commit,” he says.
Think about whether your current home and neighbourhood will work for you in the future, or if it’s worth relocating earlier so you can make accessibility improvements before you need them. Remember that as you age, your priorities will change — not just in terms of fewer stairs and more handrails, but also in terms of things like walkability and community. If you’re concerned about having enough cash on hand to cover costs, Rabie notes that downsizing is one way to shift some money from real estate to more liquid assets.
Remember that government support is available, such as tax deductions and rebates for accessibility-related home improvements or to offset the cost of caregiving.
How much should you have saved overall? While one commonly cited benchmark is that a couple should have $1 million saved at age 65, that number changes if you factor in aging in place with in-home support — up to $1.3 million with moderate homecare needs in the final 10 years of life, or if one or both live to 100 in relatively good health.
Aging in place takes planning — and vision
Well before you need help, contemplating aging in place and how you’ll make it work should happen. Before you meet with an MD Advisor, think through different scenarios and what your response might be to each. Then plan to talk about it some more. Your advisor can help you look at resources, costs, rate of return and asset allocation and figure out how to make aging in place work best for your situation.
“I always ask them what they are expecting,” Rabie says. “It’s a comprehensive discussion.”
1 https://www.everythingzoomer.com/money/2023/05/01/the-cost-of-aging-in-place/
2 https://www.cma.ca/sites/default/files/pdf/health-advocacy/activity/CMA-LTC-Deloitte-Report-EN.pdf
*MD Advisor refers to an MD Management Limited Financial Consultant or Investment Advisor (in Quebec), or an MD Private Investment Counsel Portfolio Manager.
The above information should not be construed as offering specific financial, investment, foreign or domestic taxation, legal, accounting or similar professional advice nor is it intended to replace the advice of independent tax, accounting or legal professionals.
