It's an important question... but what's even more important is the answer!

• We all know that the population is aging.
• In 1900, the number of people over 100 years old in Canada was 3.
• In 2003, this number increased to 6,300, and it's expected to reach 80,000 in 2050.

Most retirement plans are viable under ideal conditions.

• But because people are living longer, many may require long-term care that will deplete their savings faster than expected.
• To be more precise, 50% of people over the age of 65 will need long-term care during their lifetime.¹

Individuals affected by a loss of independence can choose from one of three lifestyle options.

Staying at home:

• Home support provided by the government is minimal, offering only a few hours per month to individuals who are entitled to this service.
• This means individuals who wish to stay at home will have to either rely on their loved ones, or
• pay an average of $1,500 per month for basic care, or
• $3,100 for special care.

Staying in a private long-term care facility:

• The cost of these facilities varies from $2,000 to $8,000 per month,
• with a waiting period of 2 to 9 months.²
• Note that the expenses associated with home support services for the spouse, if applicable, are in addition to these costs.

Living in a government subsidized facility:

• The costs associated with this option vary from $1,469 to $4,045 per month, depending on the province and the number of beds in the room.
• Admittance into a public long-term care facility is based not only on:
  •  loss of independence, but
  • also on the person's income or assets³ and,
• for individuals requiring several hours of care per day, whether or not this care can be provided by
  • their immediate family, or
  • their friends.

Here is an example of how loss of independence can impact retirement planning:

Mark and his wife Andrea are 56 years old. They each earn $50,000 per year before tax.⁴

They each have $150,000 in RRSPs and $25,000 in non-registered investments.

Their goal is to retire at 65 and to have an annual family income of $51,310 (indexed at 2.5%) or 70% of their current annual after-tax family income.⁵ The couple will need to accumulate $722,784.

In order to achieve this goal, each of them will have to invest $4,000 per year in their RRSP, assuming an annual return of 7%.

However, if Mark or Andrea were to need long-term care (from age 72 to 80) at a monthly cost of $2,500, they would need to accumulate $910,995 in order for the healthy spouse to be able to continue living comfortably.

As this example indicates, it's important to consider long term care insurance when doing retirement planning, because one spouse's loss of independence can seriously affect the outcome of the plan.

There are solutions currently available on the market that offer long-term care benefits to protect the quality of life of the insured and the insured's spouse, preserve the couple's assets and RRSPs, and guarantee quality care.