.
MONTREAL, Quebec / The Gazette / Life / July 29, 2009
Longevity is expensive, prof warns
By David Johnston, The Gazette
Like a lot of other Montrealers,
Avi Friedman of McGill University has taken notice of the tremendous construction boom in new apartment complexes for senior citizens in and around Montreal.
As the Canadian Mortgage and Housing Corp. reported last month, half of all new apartment construction in greater Montreal between 2003 and 2007 was geared toward the retirement market. Quebec had the biggest baby boom in the western world, and Quebec developers are clearly preparing for the future.
But Friedman, a professor and director of McGill's affordable-homes program, says he has noticed something about the new apartment complexes coming on market. They don't offer much in the way of assisted living. With few exceptions, you have to leave if you need more than two hours of assisted care a day. And at an average monthly rent of $1,375 for a one-bedroom unit, prices for these new units for autonomous seniors are high enough to potentially drain a lot of people's bank balances over the long run.
That's what you have to watch out for, Friedman cautions. Governments might not be solvent enough in the future to underwrite the costs of housing and caring for the baby boomers. Longevity is expensive. Friedman says
he watched his own "well-off" parents exhaust most of their life savings in their last five years before death, purchasing assisted care in the private sector.
"The earlier you prepare for this potential scenario, the better off you will be," he says.
The caution that Friedman urges with respect to spending too much money too early in retirement appears to have taken hold in and around Montreal, at least through this economic downturn that has come on the heels of the boom in new seniors' housing.
Vacancy rates are high - 7.9 per cent for private retirement homes in Quebec, and 9.2 per cent on Montreal island. A rate of three per cent is considered a balanced market.
It won't be until 2021 that the first of the baby boomers, born in 1946, will be turning 75, the average age of people in retirement homes. The boomers will surely help bring vacancy rates down.
"But that's quite a long time away," says
David Foot, a demographer at the University of Toronto, and author of the best-selling book, Boom, Bust & Echo.
Both Friedman and Foot see a problem looming on the horizon with government's financial capacity to take care of aging baby boomers. They say most boomers are going to have to recognize that they will have to take care of themselves, if they have any savings at all.
Friedman says the poorest and most desperate seniors in the years 2030 to 2050 probably will fall on "government something" in terms of support. But others will need to look elsewhere, mainly to private caregivers. And that will cost money.
Among Friedman's new clients in his private practice is an Edmonton organization, the Good Samaritan Society, that has hired him to propose affordable-housing options for the inevitable new wave of foreign workers that elderly Canadians will need.
"I've always been a Keynesian in my economic thinking," Foot said, "but I'm really becoming worried about the kind of big deficits that governments are starting to run up again. It just ties governments' hands in terms of health care down the road.
"We were heading in exactly the right direction, reducing debt as a proportion of gross domestic product, to prepare for the boomers hitting the health-care system in old age.
"And now we have sort of thrown that out the window. That's a major concern."
ACTUARIAL AVERAGE AGE OF DEATH FOR QUEBECERS
Over the next two decades, more than $30 trillion in household wealth in the world's richest countries will disappear because of the impact of demographic trends on savings, according to a 2005 study by the McKinsey Global Institute.
With life expectancy rising by two years every decade since the 1950s and modern welfare states deep in debt and new rising deficits, seniors will increasingly have to rely on their savings to take care of themselves in very old age, the study says.
Although Statistics Canada reported in 2006 that life expectancy in Quebec at birth was 76.4 years for males and 82.0 for females, men who live to age 65 can expect to live to on average to 81.5, and women to 85.5. [
rc]
The following graph shows the actuarial
Average Age of Death
for Quebecers once they reach a given age:
Males
Age - Life expectancy
65 - 81.5
75 - 85.0
80 - 87.5
85 - 90.5
90 - 94
95 - 97.9
100-102.0
Females
Age - Life expectancy
65 - 85.5
70 - 86.5
75 - 87.9
80 - 89.6
85 - 91.9
90 - 94.9
95 - 98.4
100-102.4
© Copyright (c) The Montreal Gazette
Like a lot of other Montrealers, Avi Friedman of McGill University has taken notice of the tremendous construction boom in new apartment complexes for senior citizens in and around Montreal.
As the Canadian Mortgage and Housing Corp. reported last month, half of all new apartment construction in greater Montreal between 2003 and 2007 was geared toward the retirement market. Quebec had the biggest baby boom in the western world, and Quebec developers are clearly preparing for the future.
But Friedman, a professor and director of McGill's affordable-homes program, says he has noticed something about the new apartment complexes coming on market. They don't offer much in the way of assisted living. With few exceptions, you have to leave if you need more than two hours of assisted care a day. And at an average monthly rent of $1,375 for a one-bedroom unit, prices for these new units for autonomous seniors are high enough to potentially drain a lot of people's bank balances over the long run.
That's what you have to watch out for, Friedman cautions. Governments might not be solvent enough in the future to underwrite the costs of housing and caring for the baby boomers. Longevity is expensive. Friedman says he watched his own "well-off" parents exhaust most of their life savings in their last five years before death, purchasing assisted care in the private sector.
"The earlier you prepare for this potential scenario, the better off you will be," he says.
The caution that Friedman urges with respect to spending too much money too early in retirement appears to have taken hold in and around Montreal, at least through this economic downturn that has come on the heels of the boom in new seniors' housing.
Vacancy rates are high - 7.9 per cent for private retirement homes in Quebec, and 9.2 per cent on Montreal island. A rate of three per cent is considered a balanced market.
It won't be until 2021 that the first of the baby boomers, born in 1946, will be turning 75, the average age of people in retirement homes. The boomers will surely help bring vacancy rates down.
"But that's quite a long time away," says David Foot, a demographer at the University of Toronto, and author of the best-selling book, Boom, Bust & Echo.
Both Friedman and Foot see a problem looming on the horizon with government's financial capacity to take care of aging baby boomers. They say most boomers are going to have to recognize that they will have to take care of themselves, if they have any savings at all.
Friedman says the poorest and most desperate seniors in the years 2030 to 2050 probably will fall on "government something" in terms of support. But others will need to look elsewhere, mainly to private caregivers. And that will cost money.
Among Friedman's new clients in his private practice is an Edmonton organization, the Good Samaritan Society, that has hired him to propose affordable-housing options for the inevitable new wave of foreign workers that elderly Canadians will need.
"I've always been a Keynesian in my economic thinking," Foot said, "but I'm really becoming worried about the kind of big deficits that governments are starting to run up again. It just ties governments' hands in terms of health care down the road.
"We were heading in exactly the right direction, reducing debt as a proportion of gross domestic product, to prepare for the boomers hitting the health-care system in old age.
"And now we have sort of thrown that out the window. That's a major concern."
ACTUARIAL AVERAGE AGE OF DEATH FOR QUEBECERS
Over the next two decades, more than $30 trillion in household wealth in the world's richest countries will disappear because of the impact of demographic trends on savings, according to a 2005 study by the McKinsey Global Institute.
With life expectancy rising by two years every decade since the 1950s and modern welfare states deep in debt and new rising deficits, seniors will increasingly have to rely on their savings to take care of themselves in very old age, the study says.
Although Statistics Canada reported in 2006 that life expectancy in Quebec at birth was 76.4 years for males and 82.0 for females, men who live to age 65 can expect to live to on average to 81.5, and women to 85.5. [rc]
The following graph shows the actuarial
Average Age of Death
for Quebecers once they reach a given age:
Males
Age - Life expectancy
65 - 81.5
75 - 85.0
80 - 87.5
85 - 90.5
90 - 94
95 - 97.9
100-102.0
Females
Age - Life expectancy
65 - 85.5
70 - 86.5
75 - 87.9
80 - 89.6
85 - 91.9
90 - 94.9
95 - 98.4
100-102.4
© Copyright (c) The Montreal Gazette
