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By Brian Morton
Vancouver Sun
Friday, December 29, 2006
British Columbians may be more worried than their fellow Canadians about health care costs in their golden years because the province has not yet ended mandatory retirement.
Adrian Mastracci, fee-only portfolio manager at KCM Wealth Management in Vancouver, says, "A lot of my clients are busier after they retire. They start businesses."
That's the opinion of Michelle Kay, a senior retirement planning specialist, whose company conducted a survey concluding British Columbians are more concerned about being able to cover their health care costs in retirement than other Canadians.
"People think that if they can't extend their working years, they can look at extra costs in retirement which are typically health care costs like prescriptions," Kay said in an interview. "That would be my guess as to why British Columbians are most concerned. Some who are retired pay high prescription costs. And when people are forced to retire, they don't have the extra income."
She said Quebec, Ontario and Alberta, as well as other provinces and territories, have already ended mandatory retirement. B.C. has indicated that it will introduce similar legislation in the spring.
Kay also said that Canadians' biggest concern is how they will maintain their standard of living in retirement.
According to a news release, Canadians and Americans have drastically different fears when it comes to retirement.
The survey conducted by Decima Research and Kelton Research concluded comparably few Canadians worry about covering health care costs in their retirement years, while this is the greatest fear among Americans. Only one in 10 Canadians (12 per cent) say this is their biggest concern, compared to one in three Americans (30 per cent).
However, the survey, which contacted 1,000 Canadians, also noted that 17 per cent of British Columbians -- the highest in the country -- are most concerned about not being able to cover health care costs, with Quebecers the least concerned at five per cent.
Under B.C.'s PharmaCare program, 100 per cent of prescription drug costs are covered for seniors with a net family income of less than $33,000 per year. The deductible individuals must pay before they receive government coverage rises with family income. Following PharmaCare's formula, a senior with a net family income of $60,000 a year has to pay for medications worth two per cent of that income ($1,200) before PharmaCare will cover three-quarters of further drug costs. Despite Kay's comment, Adrian Mastracci, a registered financial planner in Vancouver with KCM Wealth Management, said mandatory retirement has never concerned his clients with respect to health care. "A lot of my clients are busier after they retire. They start businesses."
Instead, Mastracci thinks it may be related to the fact that British Columbians are generally fitter than other Canadians -- and perhaps worry more about health issues. "Maybe the people in Quebec have a more laissez-faire attitude."
Mastracci said his clients aren't too concerned about covering health care costs, but he tells them they need a good-sized nest egg to cover such things as possible long term care.
Michael Thorne, a certified financial planner, said in an interview that he agrees Canadians are less concerned about health care in retirement than Americans. "However, there's still considerable concern by people [in B.C.] who recognize the cost of critical illnesses or long term care. Health care doesn't cover people nearly as well as people think it does."
Thorne said he was surprised at the B.C. survey results, although he suggested there is more media coverage oft health care problems here. "Perhaps people are more aware here."
Other findings in the survey include:
- Canadians between the ages of 25-34 are the group most concerned—at 15 per cent—about covering health care costs in retirement. Those between the ages of 18-24 are least concerned, with only six per cent stating this as their largest fear.
- Canadians between the ages of 35–44 are the most concerned about having to work longer (33 per cent); those over 55 are the least concerned (10 per cent).
- Those in Alberta are most concerned about having to work longer to supplement retirement savings (35 per cent) while those in B.C. are the least concerned (14 per cent).
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