Wondering what retirement could look like?
We’ve broken out each stage of the retirement journey and laid out steps you can take to prepare yourself for the retirement you’ve been dreaming of.
Thinking about and planning for your continuing care needs, as you grow older, is something that should happen both prior to and during retirement. Spending time planning for the possibility of needing assistance with daily living at some point during your retirement years, allows you to learn about services available from the province as well as private providers and the potential costs ahead of when you need those services.
There are key questions you will need to consider:
By planning ahead and determining what options are available in your area, you can then make important decisions about your care, whilst you still have capacity to do so, and can budget and plan accordingly.
This page will provide you with some key information and resources to help you with your decision making journey.
Get a better understanding of the spectrum of care available and privately funded vs publicly funded options and costs.
What privately and publicly funded services are available if I want to live independently at home but need some assistance with daily living?
Let’s work through some proactive planning steps you can undertake as a household.
What options are available to protect my family against the financial risks of needing continuing care?
Accessing the accumulated equity in your home to pay for care.
Links to additional resources to help you plan for your continuining care needs.
According to Alberta Health Services’ 2018-2019 Annual Report1, in 2018, 13% of the population, or 553,474 Albertans, were aged 65 or over and AHS provided care to 26,000+ seniors in 464 facilities (AHS care statistics exclude private care). They project by 2028, the proportion of Albertans aged 65 or older will increase to 17% of the population or 847,086 Albertans.
Currently, the availability and cost of continuing care services varies widely between communities in Alberta. As the proportion of our population age 65 and over increases, it is not unreasonable to assume the proportion of Albertans requiring care will increase.
For some Albertans, their retirement period may exceed 30 years. It may therefore seem impractical to plan for your changing health and lifestyle needs over this duration. However, changes in your health can occur suddenly at any age. The process of researching your options, completing proactive financial planning and communicating your wishes to your loved ones gives you and your family the power of choice when it comes to finding care when you need it vs. having your options severely constrained due to lack of resources.
The phrase long-term care may be broadly used to refer to accommodations and support services provided when we may no longer be able to complete all the activities of daily living in our current home environment without assistance.
In fact, long-term care in Alberta refers to a specific type of accommodation and health care services for individuals with more complex needs.
Depending on the level of services and care required, there are multiple housing options available for Albertans. Here, we will break down communal housing into three categories: independent living, supported living and assisted living (long-term care).
Independent living housing is for seniors who can live relatively independently, but prefer maintenance-free communal living and having assistance and services on site, if needed. Occupancy may be in the form of a rental contract or outright ownership of a residential unit. Independent living properties in Alberta include:
Supportive living can be in facilities or personal care homes and include support services onsite, if needed for any reason. These facilities are designed to allow a resident to age in place as commonly meals and health supports are provided, allowing residents to live independently. Services are typically available 24 hours a day. All supportive living facilities must be licensed through the province of Alberta.
These facilities may be privately run and operated by for-profit or not-for-profit operators. Residents are responsible for paying for their accommodation costs such as room, meals, housekeeping and any optional services that may be offered by the supportive living operator. Additional services may be included in the basic package or may be available for extra fees.
According to the 2020 Seniors Housing Survey completed by the Canada Mortgage and Housing Corporation (CMHC), the average cost of seniors housing (for standard spaces) in Alberta is as follows:
|Region||Bachelor/Studio||One Bedroom||Two Bedroom +|
|Rest of Alberta||$2,249||$2,730||$3,626|
Adapted from Canada Mortgage and Housing Corporation, Seniors Housing Survey Data Tables, January 25, 2021. This does not constitute an endorsement by Canada Mortgage and Housing Corporation of this product.
Note: A standard space refers to a space where a resident receives less than 1.5 hours of care per day or is not required to pay an extra amount to receive high-level care. Both private and non-profit residences are included in the survey universe. These figures represent average costs only and do not include ancillary services.
Publicly funded care, including health, personal services and living arrangements is accessed through Alberta Health Services (AHS). Under the Alberta Designated Supportive Living (DSL) program, AHS controls access to a specific number of spaces in supported living facilities according to an agreement between AHS and the operators.
DSL provided by AHS is available once an assessment is completed by an AHS Case Manager. In DSL, health and personal care needs are provided by AHS Home Care staff who come to the site according to the schedule developed with a Case Manager. The cost for accommodation is paid for by the individual, and maximum rates for DSL and long-term care are set by the Government of Alberta. AHS offers a fee waiver process if the accommodation charge will cause financial hardship.
As of October 1, 2020, the maximum charges for public supportive living are:
|Room type||Daily||Average monthly|
In Alberta, long-term care supports individuals with more complex health needs when care cannot be safely provided in their own home, or within the scope of independent or supportive living properties. These facilities are sometimes referred to as nursing homes. All long-term care operators are required to follow the Long-Term Care Accommodation Standards in Alberta.
Private long-term care facilities are available to individuals who meet the AHS criteria for long-term care but choose private care. It is also an option for seniors who do not meet AHS eligibility requirements for funded care, but choose to access private long-term care. Private care facilities can be accessed without working with an AHS case manager. As care has been arranged privately with the provider, and not working with an AHS case manager, all fees for health, personal care services and accommodation are set by the housing operator and paid for by the individual.
In order to access any publicly funded long term care, an assessment by an AHS case manager needs to be completed. Residents in long-term care are responsible to pay an accommodation charge, but health care services provided by AHS in long-term care settings are publicly funded and provided at no cost to residents. The Alberta government sets the maximum accommodation charge in long-term care and the maximum cost for long-term care is the same as Designated Supported Living facilities. AHS offers a fee waiver process if the accommodation charge will cause financial hardship.
As of October 1, 2020, the maximum accommodation charges for public long-term care are:
|Room type||Daily||Average monthly|
Source: Government of Alberta, Continuing care accommodation charges
In designated supportive living and long-term care facilities, accommodation charges may be fully or partly covered for residents who are eligible for the Alberta Seniors Benefit.
Generally, most in-home care is provided by Health Care Aides, although service providers may also be referred to as Personal Support Workers or Personal Care Attendants amongst other job titles.
Alberta Health Services lists the following functions Health Care Aides perform for their clients2:
If in-home care is sought through a business or agency, costs will usually be determined based on the number of hours per week care is needed and cost per hour of the aide(s). It is recommended to research costs in your home area directly as the availability and cost of services vary across the province. Health Care Aide services do not include therapeutic services such as those administered by a therapist, LPN or RN and if those costs are not covered by AHS, they will be in addition to Home Care Aide services.
Private home care providers may also offer personal services for clients in addition to those listed above, such as:
If you choose to directly employ a Home Care Aide, they may be considered a domestic employee and you will be responsible for screening, hiring, payroll and managing your own employee(s). For more information on this topic, please refer to the following resources:
In Alberta, the AHS Home Care Program provides personal and health care services for clients living in their home or other private residential settings. Health and personal care services provided through the Home Care Program are publicly funded and provided at no cost to eligible Albertans. Home support services such as homemaking assistance may also be available, but a co-payment fee for these services may be required.
To access publicly funded home care services through AHS Home Care, an assessment is required to be completed by an AHS health professional. See the AHS Home Care brochure for more information.
Self-managed Care is an alternate method of service provision offered through AHS. The program provides resources to directly pay for and manage personal care and home care support services. AHS guidelines state you must:
As of the 2016 Census, 72.4% of Albertans were homeowners3. This may have led to conventional thinking that as we age and become unable to maintain independent living in our own home, we can sell it and use the net proceeds to pay for ongoing supportive living or long-term care expenses.
One example where the “conventional” thinking discussed above may not work is in the case of couples. For example, what if one spouse needs a level of care that is best supported in a communal living facility, but the other spouse wishes to remain independent and in the family home? The couple must now budget for accommodation and other expenses necessary for the spouse who requires supportive living or long-term care, plus the costs of continuing home ownership and lifestyle expenses for the independent spouse.
Furthermore, the solution of selling a family home is highly emotional. If you want to stay in your home as long as possible rather than selling and moving into a facility, either as an individual or a couple, you must now budget for your regular home ownership and lifestyle expenses; plus any required modifications to your home that enable you to continue living there safely and independently, plus any costs associated with home care or personal services you need and that are not covered by AHS Home Care.
Careful consideration should also be given to the other costs associated with home ownership you may start to incur as you are no longer able to perform certain tasks yourself. Potential services you may have to hire out for include: snow removal, lawn and yard care, minor and major repairs and maintenance of the interior and exterior of your home.
The question you should ask yourself is, what planning do I need to undertake now to ensure I have the financial resources to pay for assisted living in later years?
The process of self insuring the risk of any major event is to build and segregate funds you can draw on if that event occurs. In the case of self insuring the potential costs of assistance with daily living where funds may be needed over a period of years and the time horizon may be deferred well into the future, we recommend working with an advisor to create a financial plan.
The financial plan needs to incorporate some assumptions around the cost of care commencing at a future date along with your other needs. It will also need to be tested to determine if your retirement income sources will be sufficient to cover both your anticipated lifestyle expenses and your care needs. If the projections indicate a shortfall, you can work with your advisor on resolving it. You may need to save more, defer your retirement date, or constrain your other retirement spending to ensure your plan has the reserves required to fund care. This type of risk management needs to be undertaken well in advance of a potential need to ensure your household has sufficient resources saved.
Let’s work through an example of the planning process:
Meet Ted and Val, ages 58 and 54. Ted and Val are looking to retire in the next 2 years. They both have good longevity in their families and both sets of parents are now in their early to mid-eighties. However, Ted’s father, age 85, recently moved into a private long-term care home and his mother, age 80, is still residing in their family home. The facility for Ted’s father was chosen for proximity to his mother’s home so she can easily visit, and Ted feels they provide an excellent level of care.
However, the accommodation cost of Ted’s father’s long-term care home alarmed Ted and he now wants to ensure he and Val will have sufficient resources saved, should the same scenario apply to them during retirement.
Ted and Val estimate their lifestyle expenses to be $6,000/month during retirement, broken down as follows:
Ted’s father’s care home accommodation expense is $3,200 a month. Using that for our budget planning, we now look at the monthly expenses if Ted requires supportive living but Val remains independent:
Ted and Val’s advisor now needs to run their financial forecast to include an increase in monthly expenses from $6,000 to $7,490/month from Ted’s age 85 to his life expectancy, and further adjust again for Val’s ongoing needs, if her life expectancy is greater than Ted’s. Ted, Val and their advisor will also need to keep inflation in mind in the planning forecasts, as all the above listed costs will increase over time as the cost of living increases annually. If we assume a 2% yearly increase in the cost of living from today until Ted’s age 85, $7,490/month in today’s dollars becomes $12,784/month in future dollars.
If Ted and Val are like the majority of Canadians who are not a part of a defined benefit pension plan, their chief sources of retirement income will likely be from their retirement savings (RRSP, TFSA, non-registered accounts to name a few) and government pensions such as the Canadian Pension Plan (CPP) and Old Age Security (OAS).
The risks of self insurance they must manage are:
Major market downturns or unplanned/overspending against the recommended budget may impact their ability to retain retirement savings sufficient to pay for their desired long term care needs in the future.
If, on further analysis, you determine you want to guarantee some form of future income is available to you in the event you need long-term care or home care, then you may want to consider what product options are available. Here are a few insurance based funding options:
Critical illness insurance is a form of insurance designed to provide the insured with a tax-free lump sum payment if they are diagnosed with a serious condition. As serious illness can cause an increase in uninsured medical and personal expenses; plus a potential loss of income for both the affected individual and their immediate family members, these policies are designed to provide a lump sum that can be used by the beneficiary for any purpose.
What conditions do a critical illness policies cover?
When looking at critical illness insurance specifically to help protect your household from the financial costs associated with receiving assistance with daily living, it is important to consider the conditions a policy covers, for instance:
You also want to ensure your policy coverage extends to a reasonable age. For instance, if coverage ceases under a critical illness policy at age 75, the policy will certainly provide benefits during your working years and early retirement, but be of limited use if you are concerned about insuring against serious illness later in life.
Some comprehensive policies may offer, as a standard benefit or as an add on, a covered condition known as Loss of Independent Existence benefits. Loss of Independent Existence means a definite diagnosis of the total inability to perform, by oneself, at least two activities of daily living for a minimum continuous period of time (as stated by the insurance company) with no reasonable chance of recovery. This benefit may then cover other serious conditions not explicitly covered under the policy but require you to need daily assistance with living.
The cost of coverage will depend on the type of plan you choose, the payment period you choose, your gender, age, smoking status, medical history and other factors. Medical underwriting may be required, including information from your attending physician. If you are 65 or over at the time of application, insurance carrier and coverage choices may be limited.
To learn more about critical illness insurance available through ATB Insurance, click here: Critical Illness Insurance
This form of insurance is currently not widely available as it is only offered through a very limited number of insurance carriers in Canada today. Long-term care coverage is intended to provide benefits if you become unable to care for yourself and need assistance to manage daily living activities.
Plans may include a waiting period (also known as an elimination period) before benefits can be paid, ranging from 30-90 days. Typically, insurance benefits will only be payable if you require the services of a long term care facility or professional assistance at home and you are unable to perform two or more activities of daily living, which include:
The most basic form of benefit is a facility care benefit. These benefits are expressed as either a daily or monthly dollar amount payable to the insured. Benefits are paid once the waiting period has passed and personal care services are required on a long term basis, in a long-term care facility, by order of a physician.
Some plans may offer an optional benefit that allows the insured to receive medically necessary care in their own home, called Home Care benefits. Policies may offer additional benefits at additional cost.
The cost of coverage will depend on the age and health of the insured at the time of application, as well as the waiting period, coverage and options selected. Long-term care coverage will require an application and medical underwriting may be required, including information from your attending physician.
If paying ongoing premiums for a potential future benefit is not appealing; or you are not eligible for insurance, but you still want to protect your household’s ability to pay for care against unforeseen risks, such as market downturns or unplanned spending, an alternative solution may be an annuity.
Unlike an insurance product, where you pay premiums over time for a specified future benefit, which is paid out when an insured event occurs, annuities are somewhat reversed. You pay a lump sum today to a life insurance company in exchange for a period of guaranteed payments, which may commence right away, in the case of immediate annuities, or at a future date/age in the case of deferred annuities.
Two of the most common forms of annuities are guaranteed life annuities and term certain annuities:
There may be other types of annuities available in the market in Canada. More information is available on annuities from the Financial Consumer Agency of Canada - Annuities
Annuities can be purchased with registered funds, such as funds currently in an RRSP or a RRIF, or non-registered funds.
Tax treatment of the annuity payment you receive will depend on the type of annuity purchased.
|Registered (i.e. those purchased using registered funds such as RRSPs and RRIFs)||100% of the annuity payment is taxable in the year received.|
|Non-registered annuity||Income is taxable in the year received but only a portion of the annuity payment is taxable. Two methods of taxation can apply: 1-prescribed taxation, wherein the taxable portion remains the same yearly, or 2-accrual taxation wherein the taxable portion is calculated annually based on income earned since the last anniversary.|
The amount of annuity payment you will receive is determined by multiple factors, such as:
This type of life annuity may be offered by insurance companies when an applicant has a permanent or progressive impairment that has severely affected their life expectancy. To be eligible, the applicant must generally be underwritten by the insurance carrier and have survived the impairment for a minimum period of time prior to application and be expected to survive for a minimum period of time post application as specified by the insurance company. This type of annuity may then result in either a lower premium or higher income than for someone of equivalent age and gender without a condition that shortens their life expectancy.
The 2019 federal budget introduced advanced life deferred annuities (ALDAs) as a qualified investment for an RRSP or RRIF beginning in 2020. This allows an RRSP/RRIF annuitant to transfer 25% of their account value (subject to a CPI-indexed dollar lifetime limit of $150,000) to a deferred life annuity, where annuity payments can be deferred until age 85. This allows registered account annuitants to defer the tax burden associated with minimum withdrawals to a later age. They may also provide some longevity and future care costs protection, as you now have a guaranteed annual income commencing at an age where you may need assistance with daily living and you may have significantly drawn down your other savings.
Annuities are generally considered illiquid. Some annuities may offer a short cooling off, or cancellation period, after a contract has been issued, allowing a purchaser to cancel the contract without penalty. Or, a carrier may allow cancellation for a certain period after payments commence for a fee. However, once these periods have passed an annuity contract becomes non-cancellable and changes are not permitted. Therefore, a purchaser needs to carefully consider the terms and conditions of any annuity contract before proceeding.
Your ATB Wealth advisor can work with ATB Insurance advisors to help you learn more about how annuities work, how they might integrate with your overall plan and what products are currently available on the market today.
If it is important to remain in your own home and you feel your other sources of income will be insufficient to pay for your care needs and other expenses, you may want to consider how you can access any accumulated equity in your home. Generally, a percentage of the value of a home cannot be sold as cash is required; it is typically an all or none transaction. Therefore, you may need to consider accessing your home equity via borrowing and using your home as collateral. Here we will discuss two options: home equity lines of credit (HELOC) or reverse mortgages.
With HELOC borrowing, a lender uses your home as security for a credit facility. These facilities are typically revolving lines of credit, meaning you can borrow up to a specified amount (the credit limit) over time, repay amounts and borrow again within the same credit facility.
|Maximum borrowing amount||Conventional lending rules require a HELOC’s limit to be a maximum of 65% of the value of your home for a stand-alone facility. A residential appraisal may be required and a cost may be associated. The amount you may be able to borrow will be reduced by any amounts already secured against your home.|
|Repayment||Interest is charged only on the balance outstanding and most offer interest only repayment. Generally, interest is charged at a variable rate, which means the rate of borrowing will fluctuate with market conditions and is generally tied to the lender’s benchmark rate (i.e. the bank prime rate).|
|Costs||Legal fees may be payable as well to register the mortgage against your property. Plus potential appraisal costs as mentioned above.|
|Application and approval||HELOC lenders require borrowers to go through a credit application process and the credit limit you will ultimately be approved for will be determined by your capacity to service the debt as assessed by the lender. As a result, the amount you may be approved for may be less than 65% of your home's fair market value.|
|Other||Borrowers continue to be responsible for all property taxes, utilities and maintenance on their home.|
See ATB Home Equity Line of Credit (HELOC) to learn more.
When contemplating using a HELOC to access your home equity and pay for care costs, carefully consider that these facilities will require you to make payments equal to the interest accrued monthly as a minimum and therefore your monthly expenses will increase as a result; further drawing down your savings every month.
A reverse mortgage is a mortgage loan that uses your home as collateral. Typically, all owners registered on the title of your home must be borrowers and age 55 or older at the time of application.
|Maximum borrowing amount||Borrowers may be able to borrow up to 55% of the value of their home. The actual eligible amount will be based upon several factors such as; your age, property location, home type and appraised home value. If you have debt outstanding and secured against the home, reverse mortgage proceeds must be used first to pay-off these debts.|
|Repayment||Interest is charged on the mortgage and is typically higher than conventional mortgages.Generally no regular repayment of principal or interest is required. The interest charged compounds and is added to the outstanding mortgage balance.The full balance must be repaid when the borrowers sell the property or pass away.|
|Costs||Reverse mortgages have set-up fees and legal fees may also be incurred.You may be able to repay your mortgage loan early, but penalties may apply.|
|Other||Some lenders may offer a product that allows a borrower to pull money out over time. These products generally charge a higher rate of interest than a lump sum loan. Borrowers continue to be responsible for all property taxes, utilities and maintenance on their home.|
Your wealth plan. Your vision for the future.
Alberta Health Services Continuing Care Services website:
In Calgary, the Kerby Centre offers activities, programs, and services designed specifically for those 55+. They have published Calgary’s Housing Directory for Seniors 2020.
In Edmonton, the Sage Seniors Association objectives are to enhance the quality of life of older persons and their families. Their site provides resources to help seniors learn more about housing options in Edmonton.
The Governmentof Alberta, Supports for seniors, provides information on: age-friendly communities, seniors housing, elder abuse prevention, pensions and funding for organizations.
The Government of Alberta, Financial assistance for seniors, provides information on: Alberta Seniors Benefit, special needs assistance, health, dental and optical assistance, and property tax deferral.
Alberta Seniors Housing Directory, provides a searchable directory of available housing and other resources for Seniors and their Families
Canadian Life and Health Insurance Association (CLHA) has published, A Guide to Long Term Care Insurance:
Financial Consumer Agency of Canada, Getting a home equity line of credit:
We’ve broken out each stage of the retirement journey and laid out steps you can take to prepare yourself for the retirement you’ve been dreaming of.
Alberta Health Services. Annual Report 2018-2019. Retrieved from: https://www.albertahealthservices.ca/assets/about/publications/2018-19-annual-report-web-version.pdf
Alberta Health Services.Health Care Aide (HCA), Retrieved from: https://www.albertahealthservices.ca/info/Page8636.aspx
ATB Wealth consists of a range of financial services provided by ATB Financial and certain of its subsidiaries. ATB Investment Management Inc., ATB Securities Inc., and ATB Insurance Advisors Inc. are individually licensed users of the registered trade name ATB Wealth. ATB Securities Inc. is a member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada.
The information contained herein has been compiled or arrived at from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness and ATB Wealth (nor its component legal entities) does not undertake to provide updated information should a change occur. This document is being provided for information purposes only and is not intended to replace or serve as a substitute for professional advice, nor as an offer to sell or a solicitation of an offer to buy any investment. ATB Wealth, ATB Investment Management Inc., ATB Securities Inc. and ATB Insurance Advisors Inc. do not accept any liability or responsibility whatsoever for any loss arising from any use of this document or its contents. The information provided in this article is a simplified general summary and is not intended to replace or serve as a substitute for professional advice. Professional tax advice should always be obtained when dealing with taxation issues as each individual’s situation is different. This document may not be reproduced in whole or in part, or referred to in any manner whatsoever, nor may the information, opinions and conclusions contained in it be referred to without the prior consent of ATB Wealth.
Whether you're a beginner or an experienced investor, we can help.