Mary wouldn’t call them her golden years.
At 75, the Ottawa widow lives tightly on $25,000 a year. Her condominium fees eats up most of her income. There is little cash left over each month after she pays for food, her car, insurance, Internet service and her phone. She receives no income supplement.
“Save, save, save. Put money away,” says Mary, who asked not to be identified. She is embarrassed over her dire financial straits.
“Save from the time you’re 20. I don’t care if it’s $10 a week. It adds up. It makes all the difference in the world.”
She and her husband held down “decent” jobs and raised five children together. But neither had a university degree. That put a ceiling on job and income opportunities, she said, and directly affected their ability to financially prepare for their retirement. Both worked until age 70.
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Mary is in good health. She receives two small pensions, from her job and her late husband’s work. Without them, she doesn’t know how she’d survive. Canada Pension Plan and Old Age Security (OAS) adds up to only $1,300 a month.
“It never crossed my mind,” she said of her retirement. “You know it’s coming, but it’s a long way off. Then, all of a sudden, it’s there.”
Mary’s retirement experience is a cautionary tale for Baby Boomers, the oldest of which are just turning 65, and for Generation Xers, those born starting in the mid-1960s on the heels of the boomers.
Her financial distress in retirement is an all-too-common reality for many of Ontario’s 1.9 million seniors aged 65 or older.
In fact, many Ontarians simply cannot afford to retire. Consumer costs, including health care and housing, compel them to work for wages and for health benefits.
And in the next 20 years, Ontario’s population of seniors is expected to double. No one knows better how a health crisis can wreak havoc on retirement plans than Brampton’s Anne Mitchell, 67.
Mitchell is gearing up for a second battle with cancer.
Except, this time, Mitchell is scrambling to come up with $52,000 for chemotherapy treatment not covered by OHIP.
“It will wipe out all of our savings,” Mitchell said. “This is a big financial burden. It will wipe out our whole retirement.”
Mitchell, a former office manager for a construction company and her husband John, 68, a steelworker, worked in Canada for more than 40 years and planned to fund their retirement with some retirement savings and a government pension.
But no one plans for cancer.
In 2009, Mitchell was diagnosed with chronic lymphocytic leukaemia.
Mitchell cannot take Fludarabine and Rituximab, two very powerful chemotherapy drugs. She received only two treatments before the regime was abruptly stopped because of an adverse reaction to Fludarabine that nearly killed her.
Mitchell’s doctor has prescribed Bendamustine, which OHIP will not cover.
On April 7, Mitchell used her American Express card to cover the drug’s $4,500 price tag.
“I felt complete and utter shock,” her husband John said, describing the reaction to the hefty bill.
Moving forward, the Mitchell’s say they don’t really have a game plan to pay for the chemotherapy treatment other than drawing on their life savings and credit.
“I have to make the payment somehow. I have to make the payment to keep my wife alive,” John said.
Under Ontario Drug Benefit coverage, seniors over age 65 pay the first $100 of their prescription costs, then $6.11 per prescription under the government program.
But many drugs are not covered and are shockingly expensive, reported Susan Eng, vice-president of advocacy with CARP.
“A lot of drugs are not covered in the plan and the ones not covered are expensive. In Ontario, people could fall between the cracks,” she said. “Biologics, for example, are very, very expensive.”
Biologic drugs are used to treat a wide variety of diseases, particularly conditions that affect seniors, including cancer, rheumatoid arthritis, multiple sclerosis and diabetes.
It’s expected the use of biologics among seniors will grow by approximately 20 per cent in the next decade, the Canadian Generic Pharmaceutical Association reports. Across Canada, dental and vision care are major health costs for seniors, together accounting for more than 75 per cent of their health care spending.
They also need funds to pay for other professionals such as chiropractors, massage therapists, physiotherapists and podiatrists.
If a senior is retired or works at a job without health insurance benefits, many health costs come directly outof-pocket.
One option for retirees is to purchase private insurance, but even that is prohibitively
Blue Cross health insurance coverage for a 65-year-old Ontario man who is a nonsmoker costs $85 a month for basic coverage. That monthly fee jumps to $117 for regular coverage and $147 for extended coverage. Basic coverage includes ambulance service, nursing care, dental work and partial payments towards sessions with a registered podiatrist, physiotherapist, massage therapist and chiropractor.
Blue Cross does not cover prescription drugs after age 65 because seniors in this province qualify for the Ontario Drug Benefit.
A dental exam and diagnosis costs $65, according to the Ontario Dental Association’s
2014 fee schedule.
Need dental Xrays? A complete set of 12 images costs $123. Cleaning and polishing your teeth costs a minimum of $55.
If a senior has a crown that needs to be restored, the suggested cost is $685. Root canal therapy begins at $441. Dentures start at $751 for the upper palate and $956 for lower teeth.
Seniors 65 and older pay just under $50 for an eye test.
Should a senior need a chiropractor, massage therapy, physiotherapy or a podiatrist, those costs are not paid by OHIP. Seniors must pay for those services out-of-pocket or through private insurance.
A visit to the chiropractor costs up to $140 for a 40-minute session, the 2014 Ontario Chiropractic Association Fee Schedule suggests. A detailed exam can cost between $140 and $280.
A massage delivered by a registered massage therapist costs $38 for 15 minutes and $102 for an hour. Seniors 65 and older may be eligible for publicly funded physiotherapy
with a doctor’s referral, the Ontario government’s health services branch reports.
A single senior with a yearly net income less than $16,018 or a senior couple whose combined net annual income is less than $24,175 or a senior on Ontario Works or the Ontario Disability Support Program, living in long-term care or receiving home care pay no deductible and only $2 per prescription filled.
Ensuring Ontarians have access to drugs they need regardless of cost is one of 169 recommendations contained in a 2012 report entitled “Living
Longer, Living Well,” that’s intended to inform a Seniors Strategy for Ontario.
“(We) have to start thinking about how to develop fairer and sustainable financing systems that can still allow us to ensure all Ontarians can access the pharmaceutical therapies they need, regardless of their ability to pay for them,” stated the 198-page report by Dr. Samir Sinha, director of geriatrics at Mount Sinai and the University Health Network hospitals.
Ontarians need to consider health care planning in their retirement preparations, advised Bob McGaraughty, a financial security advisor with Freedom 55 Financial in Ottawa. Plan on retiring on 70 per cent of your pre-retirement earnings, he said.
“Your health is a big issue. If you’ve got your health, then your costs are stabilized. If your health deteriorates quickly … that’s a big (cost),” he said. “If you can’t pay for your medicine, then what do you do?”
Then there is the matter of how Ontarians will afford their care as they age. According to Statistics Canada, the median after-tax income for seniors over the age of 65 in 2010 was $26,185.
Besides medical expenses, this money must also cover costs such as housing, food, transportation, social events and communication.
Some 92 per cent of Canadian seniors aged 65 and older live in private dwellings, Statistics Canada’s 2011 Census reported.
In doing so, this often requires the added costs of installing accessibility aids or hiring a live-in housekeeper. To minimize costs, some seniors choose to open their home to another person in exchange for light household chores and cheap rent.
Seniors living in subsidized housing pay either 30 per cent of their income (rent geared to income) or 20 per cent below market rent (affordable housing), depending on the housing arrangement. What their maximum income can be and how they apply varies by district and municipality throughout the province.
In Muskoka, seniors applying for a subsidized one-bedroom unit must be living on less than $29,700 per year.
And the cheaper cost comes at a price. There’s a wait list. In Muskoka it’s three to five years, but in Peel, it’s 20 years. Some areas have senior-only subsidized housing which may reduce the wait time, some do not.
Others choose to spend their golden years in a retirement home. There are 700 such facilities in Ontario, from townhouses to apartments, providing a variety of services and lifestyles for seniors from living with no assistance to in-home care.
At an average cost of $3,204 per unit per month, it’s an expense that’s well above an entire monthly budget of $2,182 for those living on $26,185 or less per year.
When seniors are no longer able to live on their own or require more intensive care than a live-in caregiver can provide, many opt to move into a long-term care home (LTC).
A LTC home provides 24-hour services and care and is often where seniors will live out their life.
Rates at the homes are regulated by the Ministry of Health and Long-Term Care at $1,707.59 a month for a basic room with subsidies available from the government.
Semi-private or private rooms cost more.
In 2011-12, the median time to be on a wait list for a long-term care room was 98 days.
Fred’s wife, Doris, moved into a private room in a LTC home last December in Bracebridge, Ont.
It costs $2,275 a month. Fred lives next-door in subsidized housing at $650 per month plus utilities. Multiple times a day, Fred joins his wife for meals paid for by the home.
How can Fred and Doris afford their care? Fourteen years ago, the couple who will have been married 55 years in June sold an apartment building they’d owned for a decade for approximately $700,000.
Fred still owns property in Huntsville: “We’ve still got that to sell if need be,” he said.
How other countries finance long-term care
CARP cites Germany as a ‘good test case’ for alternate ways of funding LTC. Germany’s population is older than Canada’s: more than 20 per cent are 65 or older; five per cent are older than 80.
Germany, like Japan, Korea, the Netherlands and Luxembourg, provides universal coverage for LTC, which operates much like the Canada Pension.
Participation is mandatory. Individuals and employers pay equal contributions. Unemployment insurance covers contributions for the unemployed.
Since 2008, total contributions for the first 44,550 Euros of annual income are 1.95 per cent, split equally between employer and employee.
Since LTC insurance is meant to provide a baseline of care, German citizens are free to purchase supplementary private LTC coverage, which more than 1.58 million Germans did as of 2009.
Every month, recipients choose between cash, for people who require lighter care or home care services, and in-kind benefits intended for people who require more intense care in nursing homes.