Older Canadians' savings are shaped by their long-term care preferences
This demographic shift is happening in most developed nations, and will result in a greater demand for long-term care.
- This demographic shift is happening in most developed nations, and will result in a greater demand for long-term care.
- Québec, for instance, anticipates that 600,000 people will need long-term care by 2050 — nearly double the current number.
The costs of long-term care
- The costs of private nursing homes are estimated to be between $5,000 and $8,000 a month.
- Home care — a preferred option for many — costs around $5,550 a month, excluding additional expenses like maintenance and food.
- While both nursing homes and home care impose financial burdens, their distinct cost structures can influence precautionary savings in different ways.
Long-term care and savings
- Survey respondents were randomly assigned to different long-term care settings (home care, semi-private room in a nursing home or a private room in a nursing home).
- Their resource allocation choices allowed us to examine how their preferences for savings varied based on the type of long-term care setting.
- This willingness to save was much larger when respondents expected to use home care; respondents anticipating home care allocated 38 per cent more resources to savings.
Long-term care insurance
- Differences in individual preferences for various care settings largely explain the savings disparities.
- In the Canada-like system, the prospect of receiving long-term care at home substantially boosts savings.
- Under the U.S.-like system, the impacts on savings of different care settings were much smaller.
- When comparing the savings of individuals opting for home care versus a private room in a nursing home, the difference in savings was almost null.
Policy implications
- Our research found that all subsidies are valued well beyond costs, with home care subsidies being more valued than nursing home subsidies.
- Middle-income individuals who aren’t eligible for means-tested programs, but who have limited savings, placed the highest value on these subsidies.
- This shows that expanding subsidies for home care can be an effective way to protect Canadians from long-term care risks.