TORONTO – A new poll suggests that health and medical costs are the biggest financial worry for Canadians later in life.
The Bank of Montreal report, titled “Living to 100: The Four Keys to Longevity,” found that 74 per cent of those recently polled foresee medical costs as their biggest expense in their senior years.
On average, those polled expect to spend $5,391 in out-of-pocket medical expenses every year after the age of 65.
About 30 per cent believe they’ll be paying between $1,000 to $5,000 in annual medical costs, 21 per cent say they have no guess, 20 per cent expect to spend under $1,000 and 16 per cent say they expect to spend between $5,000 to $10,000.
Six per cent anticipate on paying between $10,000 to $15,000, while three per cent expect to pay between $15,000 to $20,000 or $20,000 or more.
Following medical costs, the majority (57 per cent) of those polled in the report to be released Wednesday, say their second biggest expense will be food, clothing and other day-to-day essentials, followed by housing (56 per cent), long-term care (38 per cent), travel (28 per cent), entertainment and hobbies (19 per cent), debt payments (15 per cent) and supporting adult children and grandchildren (13 per cent).
Chris Buttigieg, senior manager of wealth planning strategy at BMO Financial Group, said these are credible worries because Canadians are living longer than they ever did before.
“It’s clear there is a major demographic shift happening in our country,” he said. “As Canadians’ longevity continues to improve, they should account for the health and financial issues that come with the possibility of living a longer life.”
The survey found that a quarter of those polled admit to not having a financial plan for retirement, something that is key to financial stability in old age, said Buttigieg.
“The need for financial security becomes more apparent as we age,” said the report. “When regular employment income is no longer part of the equation, the wealth accumulated during your working years may help to fill the gaps. Uncertainty about future health care costs and the Canada Pension Plan (CPP) has forced us to become more resourceful and to seek out other long-term solutions.”
Ottawa has been recently examining the issue of financial retirement security, as it presses ahead with a plan to introduce shared risk pension plans to federally-regulated employees. It hopes to implement the legislation, which enhances the Canadian Pension Plan, by early in 2015.
The option for the new plans would be available to the over 1,200 federally regulated plans, including Crown employees. The proposal does not apply to the public service pension plan, or the ones in place for members of the Canadian armed forces and the RCMP.
The BMO survey was conducted by Pollara from an online sample of 1007 adults between Feb. 27 and March 3. The polling industry’s professional body, the Marketing Research and Intelligence Association, says online surveys cannot be assigned a margin of error as they are not a random sample and therefore are not necessarily representative of the whole population.