You’ve diligently saved for the day when you can finally leave the daily grind behind. You’ve crunched the numbers, and are on track to have the funds you figure you’ll need to afford the retirement you’ve been promising yourself your whole working life. Good job. But are you sure you haven’t missed something critical in your calculations?
While it's difficult to anticipate everything the future will bring, when anticipating how much is needed to finance your retirement, one thing that's often underestimated is the rising cost of healthcare. As Canadians, we are very fortunate to have access to government-funded basic healthcare. However, the level of coverage varies greatly from province to province, and if you don't have extensive health coverage as part of your retirement benefits, you could be in for a shock.
Things that may have been included in your benefits plan during your working life, such as prescriptions, dental or vision care and hospital stays, may not be fully covered by government plans once you retire. And if you require other services such as physiotherapy or out-patient support in your home, you may find that it's up to you to pay for a greater share of these services.
The rising cost of healthcare
Given that we're smack dab in the middle of the first wave of baby boomer retirees, health services are expected to be stretched to breaking point in the coming years, as the next round of boomers reach retirement age. While it's impossible to accurately predict what future individual costs will be, we do know that Canada’s 5.2 million seniors account for only about 15% of the country’s population, but nearly half of total yearly healthcare costs.
As the population ages, and with the majority of provincial governments fighting deficits even as healthcare costs escalate, there will likely be further pressure to find ways to reduce healthcare expenses. This can mean only one thing – downloading more of the cost to the patient.
Alternative plan sources
If you'll be retiring soon and you don't have adequate healthcare coverage as part of your benefits, take the time now to evaluate other possible options. For example:
Professional associations - Unions and other professional organizations often provide group healthcare plans to their members, even after they retire.
University alumni programs - Like professional organizations, many university alumni organizations offer group benefit health plans, and this could be one way to extend at least some form of coverage into your retirement years.
Private insurers - If you don't qualify for any other form of group plan, your last option is to arrange for coverage through a private insurer. This can be costly, and far too often individuals are declined coverage if their health history even hints at future complications.
While most of us can depend on excellent medical care as we grow older, there's a strong likelihood that you'll be required to pick up more of the tab yourself. So if like many retirees you'll be living on a fixed income, an unexpected healthcare bill may force you to make some difficult decisions.