Our population is aging. The results are a greater number of retired Canadians versus younger working Canadians. The outcome is a lower tax base since there will be fewer individuals earning an income and paying taxes. A greater number of Canadians will be collecting government income through the Canadian Pension Plan (CPP) and Old Age Security (OAS) and our life expectancies are steadily increasing. Therefore, the amount of years that those individuals will collect funding will also increase.
This has a great impact on healthcare. As the number of older Canadians increases, so does the demand for healthcare. With increased demand comes an increase in costs. The annual inflation rate for healthcare ranges between 11-16% compared to a Canadian inflation rate of 2-4%. From 1971 to 2008 there was an increase in total healthcare expenditures of 1309%. With the cost of healthcare increasing exponentially and the tax base decreasing, it stands to question whether the government can maintain the current level of healthcare funding. Many Canadians understand and believe that our aging population will put a heavy financial burden on our government and this will in turn negatively affect the healthcare services and funding available to our seniors. However, in light of this understanding, the majority of Canadians currently have no plan in place to fund the cost of long term care other than relying on the government or their retirement savings.
While retirement savings may be a great source of income, if you have a surviving spouse still requiring retirement savings after you have passed, the costs of long term care will exhaust the savings in a retirement plan very quickly, leaving very little income for your survivor. Government funding does not cover 100% of the costs and is very limited to the care you are provided and where you will be placed. For example, if you choose a semi-private room your co-payment is $1787 monthly in Ontario. This covers your room, food and nursing care. If you want phone service, cable TV, transportation etc, additional charges apply. Also, you may want more flexibility or control over where you receive your care, the quality of your care and the amount of care you receive, resulting in an even larger price tag.
When looking into the future of your retirement years, it is prudent to consider not only your savings to maintain your lifestyle, but also the type of healthcare that you are going to require and where the funding for this care will come from.