In our work with retirement homes in Canada, we see a story that occurs all-too-often: people might plan well for retirement without planning for retirement home care. When people fall seriously ill or require care for Alzheimer’s Disease or other ailment, all of their planning for retirement can be for naught if they are not covered for expensive or long term care.

A closer look at two examples illustrates different approaches that people can take to planning for retirement care, along with different long-term results.

The first tale is cautionary, while the second tale is happier.

A failure in insurance coverage
Jim and his daughter Maggie believed that he was well set for retirement. As he settled into middle age, Jim might have believed that his pension would easily cover his cost of living in retirement.

Very sadly for Jim, though, he fell ill at age 58. Instead of reaching the age where his retirement savings plan fully matured, he was forced to quit working early, short-falling the nest egg he might have accumulated. On top of that, he required daily assistance in a retirement home. As he began drawing from his pension earlier than he and his daughter had hoped his financial problems quickly compounded.

Sadly, Jim could have purchased long-term care insurance through his work but he had assumed that something like Alzheimer’s or any other frailty requiring long term care “wouldn’t happen to me.” Had he paid the premiums for the 30 years he was working, the total amount would have been less than one year’s shortfall that he and Maggie currently face.

Benefiting from planning financially
Helen is a senior diagnosed with Alzheimer’s Disease. Her son and daughter-in-law were able to take on caregiving duties for only a short time before they had to give in and place Helen in a retirement home. When they found a home in their city that offered care for Alzheimer’s they discovered that monthly costs would total $6000.

As fortunately as possible for everyone concerned, Helen had a great pension plan and she had also thought ahead, purchasing a retirement savings plan that had accumulated over $80,000 over many years. After talking to a financial advisor her son converted this into an income fund from which he could draw and also reinvest.

While Helen slowly degenerates, the costs for her care and other living expenses look like they will be well covered by the retirement savings she had accumulated.
Both stories are certainly sad, but at least in Helen’s case her children are not doubly burdened by having to pay out of their own pocket while getting her the care she absolutely requires.

Not one of us likes to think that we are going to age, let alone become seriously ill as we age. However, stories like these are happening all the time and the both stories show that it is best to plan for the very worst. As we all plan for retirement we are all well advised to plan for potentially very expensive long-term care.

Jim Huinink is Director of Web Strategy for comfortlife.ca, a premier authority on retirement homes with a wide array of advice and information about retirement living including the retirement homes cost and more