We are in the midst of a “revolution” which will potentially impact in a major way – among other things - our financial security, our quality of life and our prospects to age with dignity. It’s a quiet revolution, as it has crept up on us slowly every year over the last 50 years. We’re living longer and longer.
As physicians, you are in a unique position to observe and understand these changes as they have been the result of significant advances in medicine. Furthermore, the medical profession is being tasked with addressing the care of this aging population.
As citizens, you are also part of the aging population and you need to address your own needs, both on a personal level and for your family.
The objective of this article is to talk about the aging of our population and workforce, and some of its ramifications.
Living longer (and healthier) is a good thing and is the result of significant achievements and advances in medicine and nutrition, among other things. Nevertheless, there are some problems associated with an older and aging society.
The issues related to longer living are really the outcome of having been successful at resolving a number of significant challenges to our and our society’s well-being. An older society (and living longer) is not the problem per se: it is actually the outcome of our progress.
The problem lies in our abilities to meet the challenges from living longer, including adaptation to new expectations and allocation of resources. Will the solutions of the past and current methods work in the future?
Canada’s social, economic and ethno-cultural landscape has changed significantly over the past decades. Canada’s median age (i.e. the age at which half of the population is younger and half is older) has increased from 26 years old in 1971 to about 40 years old in 2011, and is projected to continue to increase to around 45 years old in 2036 – less than 25 years from now. The median age of our population has increased more than 50% over the last 40 years.
The fastest growing age band is the group above age 65 which represented 8% of the population in 1971, and has grown to 15% at present. This segment is projected to increase to 23% of the total population in the next 20 years. Furthermore, within the 65-plus segment, the fastest growing group is the above-80 cohort, which made up less than 20% of the age 65-plus group thirty years ago, but is projected to represent around 40% of the age 65-plus group within the next 25-30 years.
These growth trends are the result of a number of different factors including:
The percentage of our population over age 65 was around 13% in 2005 (4.2 million people) and is projected to almost double in the next twenty years to 25% (more than 9.8 million individuals). The percentage of our population over age 85 will quadruple from 1.5% in 2005 to almost 6% in the next forty years.
By 2026 it is predicted that one out of three Canadians over the age of 65 (approx. 3 million people) will have developed a disability; a number which will exceed the number of those with a disability in the age 25-64 group. There will be more disabled Canadians over age 65 than under age 65.
These drastic changes in our population make-up from an age perspective are accompanied by other changes as well:
Clearly, retirement will be more expensive as a result of both living longer and the reduced interest rates. The investments required to provide $1,000 of annual retirement income at age 65 now compared to 30 years ago have almost doubled.
One of the resulting impacts will be for many Canadians to work longer, past the so-called normal retirement of age 65. This trend has already started:
Current statistics indicate that on average, Canadians spend 90% of their total life (i.e. 73 years if the total life expectancy is 81 years) in good health and 10% in poor health or in a disability state (generally speaking, the last 7-8 years of their lives).The exposure to disabilities in the latter part of life is very high. More than 73% of individuals aged 85 and over – versus 23% at age 55-64 – are expected to have a disability of some sort, usually involving the following:
Such disabilities result in significant medical expenses. More than 45% of total health expenditures are currently spent on the age 65 and over age cohort, which represents only 14% of the overall population.
The exposure to chronic diseases such as Alzheimer’s, dementia and other neurological diseases is multiplied as we get older. For example, Alzheimer’s is not often on the radar screen as a cause of death for individuals aged 65 and younger. However, it is a top five cause of death above age 80 and the ultimate outcome is likely preceded by 5-10 years of declining health. The exposure to chronic diseases involving memory loss, communication or learning issues is five times more at age 85 compared to age 65.
It is doubtful that our society is ready to deal qualitatively and quantitatively with this massive increase in the exposure to chronic diseases. The fragmentation and smaller size of the family unit are such that the concept of “children taking care of their older parents” is not likely to survive for more than a generation.
The aging population, the changes in the family unit and a healthier, longer living population have significant implications for physicians. The new and increasing risk exposures – chronic diseases and disabilities after age 65 – will require a shift in healthcare resources and abilities over the next 20-40 years.
On a personal level, physicians (and their families) are similarly impacted as the general population, including:
Most financial planning addresses the protection of risks during the physicians’ working lifetime and for retirement purposes. How much life or disability insurance do I need to protect my family if something should occur in my active working lifetime? How much money do I need at retirement to maintain my standard of living?
This new approach to financial planning calls for a greater emphasis on yourself and your game plan to live longer, gracefully and to end life with dignity.
The bottom line to our great “living longer” accomplishment is that at least three challenges will be there, with the third challenge being somewhat connected to the first two challenges.
First, we have already alluded to the “retirement income” challenge. It appears that this challenge is being met in part by changing attitudes toward retirement.
The second challenge relates to coverage and protection against the higher risks of chronic diseases related to living longer. This challenge is not currently addressed by group insurance, at least not in a sensible and economical way. Government programs will likely respond to this challenge but only to the extent that (and when) personal financial resources have been exhausted. In many cases, the family unit is unlikely to be there to address the issues.
The third challenge is the savings challenge. Canadians in general are not saving enough for retirement and certainly not enough for the challenges related to chronic diseases. Exposures to the risks of dying and becoming disabled during one’s working lifetime are still present, but in a much reduced way and should be recognized as catastrophic exposures. Living longer is creating a new beast: exposure to chronic diseases, which in turn requires more of a long-term planning exercise to address.
We have to change our paradigm and our way of thinking about aging. Dual working family units, living longer, increased exposure to chronic diseases, smaller or non-existent family units, working past age 65, etc., are dictating a new way. It is no longer only about buying life insurance to protect one’s family during one’s working lifetime and accumulating funds for retirement. It is much more about buying insurance for life both to protect our ability to be treated well in our older years and to secure an end of life with dignity.
The time to engage in this new form of financial protection and to arrange this “insurance for life” is now, not at some point in the future when we start to face aging issues and the related healthcare implications.