With caregiving costs for aging Canadians expected to mount in the coming years and placing significant pressure on families’ budgets, financial advisors can play a critical role in helping clients brace for the impact these costs might have on their finances, according to a new report from Canadian Imperial Bank of Commerce’s (CIBC) capital markets division released on Monday.
Specifically, the report suggests that the costs of caring for this demographic is expected to surge by 20% over the next 10 years from an estimated $33 billion in out-of-pocket expenses and lost wages that Canadians already foot annually.
In 2016, costs for assisted living and heavy-care services, for example, were up by 5% and 8%, respectively, the report finds. As a result, advisors might work to factor in the projected costs for caregiving when drafting clients’ retirement plan or initiating the process of building an estate plan.
“An aging population combined with longer life spans and strained social services has in recent years seen more and more Canadians taking on the role of a caregiver for their aging parents,” says Benjamin Tal, deputy chief economist at CIBC, in a statement. “And in the coming years, that tendency is only likely to intensify.”
Read: Help clients cope with aging parents
Canadians, on average, spend about $3,300 a year to cover caregiving expenses, the survey suggests, which amounts to more than $6 billion for the economy overall.
On top of the direct expenses for caregiving, of the 3,034 Canadians surveyed for the report, almost 30% of workers with parents over the age of 65 forgo roughly 450 hours of work a year to attend to their parents’ needs. When calculated, the report says, that adds up to approximately $27 billion in lost income or missed vacation time.
These estimated costs tend to be spread disproportionately, with women and lower-income Canadians bearing much of the costs associated with caregiving. Today, close to two million Canadians may already be bearing the costs of tending to elderly parents, the survey suggests.
The survey, conducted in March, comes in the wake of Statistics Canada’s release of census data last Wednesday, showing that a record number of seniors outnumber children, a trend that’s projected to increase further in the coming years.
For the first time in history of StatsCan, the results have the senior population (5.9 million) overtaking children under the age of 14 (5.8 million). By 2031, this trend may be even more pronounced, as 23% of the population could be 65 or older while children could account for just around 16%.
Read: Percentage of seniors in Canada continues to rise
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