Retirement plans ‘out of whack’: health futurist

Canadians are unprepared for the health costs they will incur after leaving the workforce, says Zayna Khayat, adjunct professor and executive in residence at the University of Toronto’s Rotman School of Management.

On this week’s episode of the Canadian Advisor.cast, the health futurist said a combination of health-care inflation, longevity and a failure to understand that the country’s universal health-care system is not free will leave retirees unable to pay their bills.

Even as the so-called great wealth transfer continues, advisors need to give clients a more realistic view of old age.

“Canadians are really not prepared for the degree to which their costs of care associated with aging will be borne by them,” Khayat said.

Canada became what’s known as a super-aged country this year, as the percentage of the population 65 and older passed 20%. The category includes a host of European and Asian nations, including Japan, Italy and Germany.

The National Institute on Ageing has warned of a “demographic double whammy” as a rising number of seniors need health care just as the industry deals with its own wave of retirements. Seniors face “a shortage of long-term care beds, home care providers and geriatric specialists.”

The average life expectancy across countries in the OECD is about 81. Canadians who reach that age rarely do so without health issues along the way.

“Health span, which is the number of years you’re in good health, is about 63 years,” Khayat said.

That means many retirees will spend part of their savings on health-care expenses. The longer they live, the more likely they are to face a major health problem.

“Because we’re staying alive longer, our rates of acquiring cancer, Alzheimer’s, [etc.] are going up because we’re around to get those diseases,” Khayat said.

Major advances

Living longer is largely a positive development. Advances in the health sciences are accelerating, in part because of the growing impact of AI on research and care delivery.

“We’re at a tipping point,” Khayat said. “Some futurists and scientists think the top three or four reasons people die or get sick will not be from biology. It will not be disease. It might be geopolitical, it might be climate, maybe it’ll be loneliness. But it won’t be because your body turned on you.”

GLP-1s — developed by Canadian scientist Dan Drucker — are already having a measurable impact on obesity rates.

Looking ahead, Khayat expects AI to have a significant effect on how health care is delivered. She points to three trends: faster scientific progress, real-time population health insights and wider use of AI to manage personal well-being.

But progress comes at a cost.

Canadians are likely to live two decades or more beyond age 65, and the health-care system will be reshaped by the country’s aging population. Retirement will not only be longer — it will be more expensive. How much more remains unclear, complicating financial planning.

Khayat said access to some health-care services could eventually be tied to wealth rather than income.

“Means testing on income isn’t closing the gaps,” she said. “We’re going to start means testing on wealth.”

The idea runs counter to the principle of universal health care in Canada. But it reflects growing pressure on how the system is funded.

For advisors, that means reframing retirement conversations — with less certainty about life expectancy and greater uncertainty around health costs. Clients who adapt by saving more and working longer may be better positioned. Those who do not face a more uncertain future.

Canadian Advisor.cast is available in both video and audio formats, via Advisor.ca, Spotify, Apple Podcasts and YouTube.