Only nine per cent of Canadians factor health care expenses into retirement savings
Tuesday, April 15, 2008
TORONTO, Ontario (February 15, 2008) - Sun Life Financial survey reveals health care costs in retirement a concern, but few are taking steps to address it A recent Sun Life Financial survey reveals that few working Canadians have factored the need to pay for certain aspects of their health care into their retirement savings. Survey results reveal that only nine per cent of working Canadians have accounted for health care expenses in their retirement savings, and 80 per cent of Canadians expect that their provincial health care program will provide them with health benefits in retirement.
Canadians appear to know that they need to put aside money for health care spending in retirement, but have not taken the steps to address the reality. Sixty-five per cent of respondents said they expect to spend some of their retirement income on health care, however the percentage of Canadians who have actually saved for this expense in retirement is far less at only 37 per cent.
“Paying for health care in retirement is something that is definitely on the minds of Canadians, employers and the government,” said Brigitte Parent, Senior Vice-President, Group Benefits, Sun Life Financial Canada. “What we’ve seen is that Canadians are looking for ways to get ready to pay for health care costs in retirement and this survey reinforces that, but also highlights the fact that they are not acting on these concerns just yet.”
Conducted by Omnitel, a division of Maritz Research, the survey shows that 36 per cent of Canadians are looking to their employer to provide health care benefits in retirement, with males more likely than females to say that they are expecting their employer to provide them with retiree health care benefits (39 per cent vs. 32 per cent).
While 42 per cent of Canadians said that they worry about paying for health care expenses in retirement, a majority have not planned for it. When asked about the amount of money needed for health care spending in retirement, 43 per cent of respondents said they did not know what they expect to spend annually on this cost. Amounts ranged from more than $13,000 to less than $500 a year.
“As a provider of group benefits, we’re seeing that while some employers are shifting away from full-employer paid benefits, a great number of them are also looking for ways to provide their employees with access to coverage in retirement,” added Parent. “That’s why it’s so important for Canadians to understand whether or not they will have access to coverage and use that information, along with other factors such as their age at retirement, any private coverage they might have and general state of health, to plan for retirement.”
Sun Life Financial suggests that individuals think about the following questions when considering how much they need to save for health care expenses in retirement:
Do you or your spouse have employer provided health care retirement benefits or have access to health benefits in retirement? And if so, what types of health care costs are covered? Do you have any other coverage (i.e. long term care insurance, critical illness insurance) that will provide for you, should you fall ill in retirement? Are any of your current health care needs (i.e. medication, paramedical services), covered by your provincial health care plan for retirees? “At Sun Life, we know that paying for health care in retirement is of concern to Canadians, and we are actively working with our customers and the government to look at ways to help Canadians address some of the challenges associated with an aging population,” added Parent.
Differences across the country
Attitudes on health care spending are generally similar across the country, with some very interesting variances. The following chart outlines working Canadians’ attitudes toward health care spending in retirement:
Question National BC AB MB/SK ON QC Atlantic Can
Which of the following statements best describes how you expect to pay for your health care expenses during retirement?
Rely on provincial health care to provide benefits in retirement 80% 84% 76% 80% 82% 78% 76%
Plan to pay for health care expenses out of own pocket 58% 66% 54% 63% 61% 51% 53%
Rely on employer to provide you with health benefits 36% 35% 24% 27% 38% 36% 44%
What steps have you taken to pay for your health care expenses when you retire?
I have not taken any steps to pay for my health care 51% 61% 62% 58% 57% 25% 50%
Savings/Investments 16% 18% 17% 14% 20% 11% 9%
Purchased personal health care insurance 11% 5% 10% 17% 5% 17% 24%
Factored into my retirement savings 9% 9% 5% 8% 7% 14% 9%
Don’t know/Other 16% 6% 7% 4% 12% 37% 9%
The national telephone survey was conducted between January 8 and January 19, 2008. A total of 1,530 working Canadians (working full time, part time or self employed) were interviewed. Survey findings are accurate, plus or minus 2.5 per cent, 19 times out of 20. More information about the survey can be found on www.sunlife.ca/retirement.
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