Your longer life may not be what you had in mind

When picturing their golden years, people often envision themselves taking an exotic trip or puttering in the garden, but the harsh reality that many fail to prepare for is the nine to 11 years at the end of the average Canadian’s life when they’re simply too ill to do any of these activities, a new report says.

This gap between life expectancy and the number of years a Canadian is expected to have a “healthy� life, is where a power of attorney comes in, naming someone to act on your behalf. And it is where too few Canadians have dared to tread, a report by RBC Wealth Management Services released Wednesday says.

During the last few years of your life, are you going to be the author?

“Money does strange things to people. And when you add all these things together, there is the potential… for some pretty negative consequences,� said Tony Maiorino, head of RBC Wealth Management Services, about the financially vulnerable period when an elderly person becomes incapacitated.

“The reality is, statistically, during the last few years of your life, are you going to be the author?�

Most people focus on the first phase of their of their post-career lives, when they’re still active and mobile, said Fred Vettese, chief actuary at Morneau Shepell.

“You’re kind of the same person you were in your 50s, just a little bit older, but otherwise you’re the same person,� he said. “And that’s the kind of person everyone envisages themselves as in retirement. Phase one, that only lasts so long…. Everyone has it in the back of their minds, but they just don’t plan for it.�

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Due to higher standards of living and medical breakthroughs, Canadians are living longer.

The number of Canadians over the age of 100 totalled 5,825 in 2011, up a staggering 25.7% since 2006, according to StatsCan. The total number of seniors in Canada aged 65 and over rose 14.1% between 2006 and 2011 to nearly 5 million, according to Statistics Canada.

RBC says more Canadians need to plan for the worst — such as incapacity or cognitive impairment — ahead of time.

Just 71% of Canadians have arranged for power of attorney, the report suggested.

Everyone has it in the back of their minds, but they just don’t plan for it

The average life expectancy in Canada for men and women is 78.9 and 83.6 years, respectively, the report says. But a man and woman’s “healthy� life is expected to last 72.1 and 69.9 years, respectively.

During that gap — 9.3 years for men and 11.5 years for women — a person may not be well enough to take care of their financial affairs.

But choosing someone to be their power of attorney is a more complicated process than it was in the past, said Mr. Maiorino.

Families are often spread out across the country, or even continents, so appointing an immediate relative is not always the best option, he said. And keep in mind that if you appoint a buddy or a spouse, they may be just as old as you.

Mr. Maiorino said the level of “unprecedented wealth� created among Baby Boomers generation is another reason for aging Canadians need to prepare.

He estimated that 50% of Canadians haven’t engaged in a discussion about these issues.

“When push comes to shove, and we start seeing these things coming into play, if the right planning hasn’t been done, the likelihood for family disruption, and potential for litigation and claims, in our view is going to go up,� he said.

Article source: http://www.canada.com/Your+longer+life+what+mind/8516942/story.html