New report highlights financial realities of aging at home

Scotiabank report calls for policy changes

New report highlights financial realities of aging at home

A new report by Rebekah Young, head of inclusion and resilience economics at Scotiabank, sheds light on the difficulties faced by Canadians wishing to age in their own homes.

Increasing concerns about the quality, accessibility, and affordability of long-term care options have led more Canadians to desire aging in their own homes. However, the report found that without sufficient savings, the combination of high care costs and longer life expectancy may result in unmet needs for many individuals.

The report emphasized the need for a new policy framework that “breaks down silos across healthcare, long-term care, and financial security and is backed by a credible fiscal plan”. It suggests addressing the “fragmented and siloed” healthcare and long-term care systems, which currently focus on expensive but least desired forms of care instead of supporting individuals to stay in their own homes.

Additionally, the report highlights the importance of reevaluating retirement income systems that force people to deplete their savings earlier than desired, despite increased lifespans. While existing social safety nets provide some assistance, they are stretched thin and fail to support aging in place or renters.

As the government faces the challenges of an aging population, the report suggests implementing greater means-testing for broader supports, which could put pressure on individuals who may no longer qualify for assistance.

The aging Canadian population and longer life expectancy are well-documented trends. However, the report delves further by examining the additional care required for aging at home and the potentially exorbitant costs associated with it, which many are unprepared to handle financially.

The report also reveals that less than one-third of Canadians anticipate experiencing a disability later in life, despite nearly half of those over 75 years old reporting disabilities. Furthermore, almost half of the respondents believe in-home care would cost less than $1,100 per month.

“That would buy less than an hour a day of support based on agency rates of about $40 per hour,” the report said. “The Canadian Medical Association benchmarks 22 hours per week as a level of care consistent with keeping patients at home instead of in a long-term-care setting. That would roughly translate into $3,500 per month — this is likely a floor since it reflects only general support, not healthcare services. At an extreme, continuous care in the home would run closer to $30,000 per month.”

The survey also shows that less than one-third of Canadians consider long-term care needs when planning for retirement, and only one in 10 have set aside funds for such expenses. Many individuals may need to rely on their homes as assets in retirement, while those who have rented throughout their lives are likely to reach retirement with little or no equity.

“The majority would default to government supports – financial, health, and long-term care – despite perceiving major failings in the level, access and quality of care,” the report said.

Demand for long-term care continues to intensify, with the Canadian Medical Association projecting that government costs for both institutional and in-home care will rise to $60 billion per year by 2031, compared to the current $33 billion. These figures do not even account for the 75% of in-home care needs that are currently fulfilled through informal support from family or friends.

“Unmet support services in the home are boosting demand for institutional care,” the report said. “[The Canadian Centre for Health Information] estimates that 10% of long-term-care residents could be cared for at home with appropriate supports. In turn, chronic unmet demand in long-term-care homes is pushing more seniors into hospital settings. In Ontario, for example, over 15% of hospital beds are occupied by alternative-level-of-care seniors.”

“Aging in place is mutually beneficial to households and governments alike, but policy biases skew in the most costly direction.”

The report concludes that without significant policy reforms, most Canadians should incorporate their health into their financial planning to maintain the option of aging in their own homes.