Health issues are driving many Canadians into retirement sooner than expected, which is problem in particular for people not financially prepared, a new report suggests.
According to the 2014 Sun Life Canadian Health Index, conducted by Ipsos Reid, 69 per cent of respondents said they were not able to retire as planned or expected. Of those, 29 per cent retired for personal health or medical reasons. Two per cent retired to take care of someone else with a health issue.
“Your retirement date may arrive sooner than you expected,” said Sun Life president Kevin Dougherty in a release. “Canadians who are not financially prepared to retire typically say they will work longer to compensate, but unfortunately, they may not have that choice.”
The survey of course comes from a company that sells insurance products to cover people if they become sick or disabled. Still, there are many examples of Canadians who’ve been unable to work due to health issues, and have had trouble making ends meet.
Almost half of the survey’s respondents – which included 3,005 working Canadians ages 30 to 65 – said they suffered at least one serious health event or accident in their lifetime. Of those, nearly two thirds said it caused some financial impact, including increased credit card debt or being forced to dip into savings such as RRSPs.
“The truth is that poor health can cost us money in multiple ways: lost wages, medicine and other forms of therapy,” the report states.
Many of the costs are unexpected, such as travel to and from medical appointments, which is not covered by Canada’s universal health care system.
Last year, Canadians reported paying $1,511 out of pocket for health care expenses, the report shows.
It also says 44-per-cent of respondents don’t expect to pay for prescription drugs, while more than 80 per cent don’t think they’ll have to fork over money for in-home care or hearing aids.
“This profound disconnect suggests either Canadians have an unrealistic level of confidence in their own health or they simply misunderstand how health care is funded,” says the report.
And while it says Canadians are worried about their health as they age, the report says only 22 per cent have saved money or planned healthcare expenses in retirement.
“Canadians as a whole are getting better at saving for retirement … but we still have a long way to go to protect ourselves if we get sick, disabled or injured either pre or post retirement,” Brian Burlacoff, a financial advisor with Sun Life Financial, said in an interview.
Many Canadians like to talk about putting away money into RRSPs and paying down the mortgage, but not less so about buying insurance, he says, likening it to a hockey game.
"Canadians love to talk about the offence, but we don’t like to talk about the defence. That’s the boring part, the insurance part," said Burlacoff.
A new, separate report from TD Insurance also looks at the financial impact of an unexpected loss of income for Canadians in their working years.
It cites statistics showing that one in two men and one in three women in Canada will suffer a critical illness before age 65.
The TD report says Canadians would need an average of $45,609 in savings if they couldn’t work for a year, due to illness or other events. People with children would need an average of $53,438. What’s more, 39 per cent of respondents weren’t sure how they would pay for their expenses if they had no income for six months.
“Personal circumstances, particularly loss of income due to critical illness, are often completely unpredictable,” TD Insurance vice president Anna Kavanagh states. ”The last thing you want to be worried about if you have a health emergency is your finances.”