- Finance Minister: ‘Canada’s rapidly aging workforce’ an urgent problem now
- AGING CLIENTS POSE CHALLENGES
OTTAWA, August 15, 2011 (LifeSiteNews.com) - Finance Minister Jim Flaherty told a group of policy consultants at a meeting in Wakefield, Que. last week that “Canada’s rapidly aging workforce” is a problem that is beginning to impact the federal government now, and cannot be relegated to the backburner to be dealt with sometime in the future.
Flaherty observed that despite great concern over recent economic crises and the current stock market fluctuations, “The need to address current challenges must not keep us from tackling the key questions that affect our future prosperity.”
These “key questions” include rising health care costs from an aging population compounded by fewer working-age taxpayers to foot the bill.
Flaherty’s concern is backed up by a draft report, titled “Canada’s Changing Demographics: The Impacts of Population Aging,” on the impacts of Canada’s aging population that was unveiled to government deputy ministers last November by Privy Council Clerk Wayne Wouters. It confirms that the demographic impact of an aging population, low birth rate, and a declining pool of younger taxpayers, is being felt now.
“The oldest baby boomers start to turn 65 in 2011, meaning the dependency ratio will start to increase significantly in a matter of months,” states the report, which The Globe and Mail obtained in redacted form under Access to Information.
“A Canada where seniors outnumber children is uncharted territory,” the report states, and offers proposals such as incentives to boost fertility rates, coaxing younger immigrants to come to Canada, and encouraging Canadians to work longer.
In May 2010, the Demography Division of Statistics Canada predicted that the number of seniors will surpass the number of children aged 14 or under for the first time ever sometime between 2015 and 2021.
The population projections for 2009 to 2036 found that Canada’s population will age rapidly until 2031, by which time the entire baby boom generation will have turned 65. Thereafter it would continue aging, but at a less rapid pace.
“Projections show that seniors would account for between 23% and 25% of the total population by 2036, nearly double the 13.9% in 2009. Higher immigration levels would do little to change the forthcoming aging of the Canadian population,” the report stated.
In February 2010 Parliamentary Budget Officer Kevin Page released one of the first official reports that addressed the disastrous consequences of Canada’s long-term below replacement birth rate.
Canada’s steady 1.5 birth rate, far below the 2.1 replacement rate, along with the accompanying aging of the population will result in “a major demographic transition,” that could have devastating financial results, the report warned.
“The Government’s current fiscal structure is not sustainable over the long term,” said the report. In order to compensate for the low birth rate the report said there must be very substantial increases in taxation and major cuts to government services, amounting to $14-28 billion.
But according to demographer Robert Sassone, PhD, the solution to demographic implosion and the resulting financial crisis is not immigration, higher taxes or raising the retirement age, but lies in increasing the fertility rate.
Leigh Doyle / August 04, 2011 Advisor.ca
Michael Berton, a Senior Financial Planner with Assante Financial Management in Vancouver, knew his client’s mental faculties were slipping when he started getting weekly phone calls.
“One of my clients would call every week to ask if she had any money left. She had over $800,000 in her accounts so there was no reason for her to be concerned,” he recalls. But the experience was enough for him to call her daughter, who had power of attorney.
Read: Dealing with mental incapacity
“I checked if her mother had enough money in her accounts or if she needed to pay additional expenses. The daughter assured me she was fine and that she’s just forgetful these days,” he says.
Aging clients with the potential for cognitive decline are an increasing reality for advisors. Berton, who specializes in financial services for the 55-plus crowd, was well prepared for his client’s change in mental ability. Being ready means encouraging your clients to talk about their potential health concerns, getting paperwork such as wills and the power of attorney in place, and having a plan to adjust their investment mix to reduce risk.
And preparation isn’t just about the clients. Advisors need to understand how demographic trends will impact their business and what cognitive decline looks like.
The demographic reality
The aging population in Canada cannot be avoided. Ninety years ago, only 5% of Canadians were 65 years or older. In 2009, the percentage increased to 14%, and will continue to grow over the next 30 years as baby boomers turn 65. Only 25 years from now, roughly a quarter of the population of Canada—about 10 million—will be seniors, according to Statistics Canada.
In addition to demographic trends, advances in medicine and healthcare are allowing people to live longer lives. In fact, one of the fastest-growing demographic groups in Canada is people over the age of 100. While living longer is a welcome thing for many, one downside is a rise in susceptibility to chronic disease. Diabetes and arthritis will be common physical problems, but more important for advisors are health problems that affect mental ability.
According to the Alzheimer Society of Canada, unless a cause or cure is found by 2038, 1.1 million Canadians will suffer from dementia. Advisors who serve seniors will need to be aware of the possibility that some of their clients will experience dementia, or at the very least, some kind of mild cognitive decline.
Age-related cognitive decline is not an all-or-nothing event. A client will not come in one day having lost all faculties. It happens slowly and can be easy to dismiss or ignore. Like other health issues, it is worth knowing the indicators that something is wrong. According to the Alzheimer’s Association (U.S.), warning signs include:
- Forgetting recently learned information such as appointment dates
- Asking for the same details repeatedly and not remembering them later
- Challenges in planning or solving problems, such as keeping track of monthly bills
- Poor judgment, especially when dealing with money
- Withdrawing from social activities or paying less attention to a favourite sports team
- Changes in mood with an increase in confusion, suspicion, depression, fear and anxiety