None of us pictures ourselves in our later years as frail, perhaps with a physical or mental disability that makes us dependent on caregivers. Yet, for many, that will be the reality, making it important for your boomer clients to plan now for long-term care.

Certainly, clients seem disinclined to consider the possibilities. A recent survey by Manulife Financial Corp. found that although 57% of Canadians worry that they or their life partner will one day need LTC, seven out of 10 participants would rather have an annual physical exam than spend an hour discussing this possibility.

Says Kevin Barber, vice president of product research and head of the retirement research group with Fidelity Investments Canada ULC in Toronto: “It’s a lot more exciting to plan for the first 10 or 15 years of retirement — the active phase of travel and entertainment — than the final phase.”

But recent statistics indicate that, for many of us, that final phase will come. According to Statistics Canada, the life expectancy of Canadian women is now 82.7 years; Canadian men can expect to live until age 78. And many Canadians will live much longer.

“We have more very old people than ever before,” says Clarissa Green, who teaches in the University of British Columbia’s Working with an Aging Population program, a series of courses for people who work with the elderly. “It’s common now for the elderly to have children who are senior citizens.”

Unfortunately, advanced age is often accompanied by deteriorating physical and mental health. Many of us will need some form of eldercare. It might mean help with cooking and housework; it might mean moving into seniors’ residences, where we can live in our own units and purchase services such as meals and housekeeping as needed. Or, it could mean 24-hour care in a nursing home.

“One in every 1.4 women and one in 2.3 men will need some kind of care after the age of 65,” says Stephanie Holmes-Winton, an independent financial advisor in Halifax.

Yet, when Wayne Taylor, president of Edmonton-based Taylor Financial Group Ltd. and president of the Retirement Planning Association of Canada, asks clients how they see themselves after the age of 75, he is usually met with stunned silence. “People are in denial about growing old,” he says. “Advisors need to get them planning for these later years.”

Taylor says advisors need to get clients thinking about the law of unintended consequences: that every action will produce unintended and unanticipated consequences.

“Clients need to think about the possible consequences of aging,” he says, “so they won’t get blindsided.”

One uncertainty is whether your clients can afford the care they may need. With the greying of Canada’s population — by 2026, it’s projected that seniors will make up 21% of our population — the cost of eldercare could skyrocket.

LTC in nursing homes is now funded by both provincial governments and residents. Maximum daily rates for residents for a private room vary dramatically across Canada — from $21 in the Northwest Territories to $66.69 in Ontario, $67.50 in B.C. and $74.50 in Nova Scotia. In New Brunswick and Prince Edward Island, where there are no caps on rates, residents pay as much as $131 and $160 a day, respectively.

In coming years, residents may have to pay even more. “We have no idea what this will cost 20 years from now,” Barber says.

Adds Taylor: “Right now, a high-end long-term care facility can cost $50,000 a year in after-tax dollars. That means taking $70,000 out of savings every year.”

So, you need to ensure that your clients’ financial plans are robust enough to carry them through the potentially costly final phase.

“Clients should also allow for the lifestyle choices they prefer,” Barber adds.

LTC insurance is one solution you can offer clients. But, Taylor says, it can be a hard sell to get clients to pay anywhere from $100 to $400 (depending on age and gender) in monthly premiums for coverage they may never need.

John Parker, assistant vice president of products and marketing with Manulife in Kitchener, Ont., says only a small portion of the Canadian population has LTC insurance, but he expects to see an increase in coming years because boomers are now seeing their parents in LTC situations.

@page_break@Those who do purchase LTC insurance, Taylor says, are often “vulnerable” women who have no one on whom to rely— widows, divorcees and those who have never married. He suggests you have regular discussions about end-of-life issues with clients.

Green goes even further: “It’s not just one conversation that’s effective, but conversations over a period of 10 years.”

You can also discuss with your clients the various sources of funding available to finance eldercare. There are: government benefits; savings or retirement income; pension income; home equity; dipping into what the client has set aside for inheritances and charitable legacies; depending on family members; and LTC insurance. In some situations, a combination of two or more of these may be a solution.

According to the Manulife survey, 22% of those surveyed expected to rely on assistance from family in their elder years. But this may not be realistic. For example, some new Canadian clients may expect their children to look after them in their old age, as is the tradition in their native country.

“But have they discussed this with their children?” Holmes-Winton asks. “These kids grew up in Canada and have probably assumed Canadian values. And they may have married outside their ethnic group.”

Also, Taylor cautions, clients’ homes are an important part of their finances and need to be maintained. “I have a 20-year maintenance plan for our home in Edmonton and our farm in Smoky Lake to keep these properties in good shape,” he says. “So, if need be, I can get maximum dollars for them. If you own your home, it’s critical to keep it in shape or it might be worth thousands of dollars less than you thought when you want to sell it.”

He also encourages clients to maintain their physical and mental assets. “Eat right, exercise, keep moving forward positively,” he says. “So, you’ll have a good quality of life in later years. Keep yourself strong so, if you’re hit with a tragedy such as the loss of a spouse, you’ll be able to cope. Surround yourself with strong people so, if life kicks you, you’ll have a place to go.”

Boomer clients, he adds, don’t need to make specific plans right now about housing for their later years: “It’s too early; the target is still moving. Small communities may shrivel and die in 15 years, and new housing options may be available.”

“Creative housing solutions will be spearheaded by childless boomers,” Green adds. “I know a group of six women who bought a seven-unit apartment building. The extra unit is now rented out, but it will eventually accommodate their paid caregiver.

“Should your clients be planning how to cope after a stroke?” she asks. “No, that’s too specific. But they should know the options open to them, should they become disabled — such as renovating the home or moving into a condo.” IE