A new report by CIBC Capital Market shows that caring for aging parents costs Canadians $33 billion per annum and significant time off work.
Caring for aging parents already costs Canadians $33 billion a year in direct out-of-pocket expenses and time off work, a number that will only grow over time, finds a new report by CIBC Capital Markets.
The report, Who Cares: The Economics of Caring For Aging Parents, co-authored by CIBC Deputy Chief Economist Benjamin Tal and Senior Economist Royce Mendes, estimates the direct and indirect costs associated with the elderly to mushroom by more than 20 per cent in real dollars over the next 10 years due solely to changing demographics.
“An aging population combined with longer life spans and strained social services has in recent years seen more and more Canadians taking on the role of caregiver for their aging parents, and in the coming years, that tendency is only likely to intensify,” says Mr. Tal.
“Add in the fact that costs associated with the elderly are already rising faster than the pace of inflation because of the high demand for such goods and services, and you can see that this will be a major concern for a growing number of Canadians in the years to come,” he says.
According to the Statistics Canada census, more Canadians today are over the age of 65 than under the age of 15 for the first time in the survey’s history, and Centenarians (100 years and over) represent the fastest-growing segment of the population. Moreover, the working age population (15-64 years) is on the decline, now at 66.5 per cent of the total population, down from 68.5 per cent in 2011.
While the effects of Canada’s changing demographics will be wide-ranging from interest rates to consumer preferences, some of the most direct impacts will be felt by those who will be assuming a caregiving role for their parents, the report says.
Today, close to two million Canadians, or 14 per cent of those with parents over the age of 65, pay for care-related, out-of-pocket costs, the report says, with those in the eastern and western provinces facing the highest direct costs, compared to those in Ontario and Quebec.
“On average that cost is $3,300 a year per caregiver, translating into an annual cost of just over $6 billion to the overall economy,” says Mr. Tal, noting that research in the U.S. suggests survey respondents usually underestimate how much they spend on caregiving-related expenses.
Many of these direct costs are borne by those with lower incomes. Canadians earning less than $50,000 per year spend on average 30 per cent more than higher-earning Canadians, implying a much greater cost relative to incomes, the report says.
However, the direct costs pale in comparison to labour-related costs.
“Close to 30 per cent of workers with parents over the age of 65 lose roughly 450 hours per year of time off work to attend to the care needs of aging parents, with the largest impact falling to women and lower income earning Canadians,” says Mr. Tal. “That translates into roughly $27 billion of lost income or foregone vacation time.”
Beyond that, Mr. Tal notes that these figures don’t take into account the reduced potential for job mobility or promotion that could be associated with taking time off work.
“It’s worth noting that there is a clear gender story here, with women taking 30 per cent more time off than men to care for an aging parent,” he says.
The report also highlighted that in 2016, costs in assisted living and heavy care services, up 5 per cent and 8 per cent, respectively, had risen significantly faster than average rent, up just 2 per cent.