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Posted June 12 , 2013


Mind the Gap: Why Canada's Baby Boomers need to plan for the period between "healthy" and "average" life expectancy

TORONTO - A large number of Canadians are not paying attention to the "gap" between their healthy life expectancy and their overall life expectancy, according to "Mind the Gap: What Canada's Baby Boomers Need to Know to Protect Themselves," a special report produced by RBC Wealth Management. The "gap" refers to the increasing number of Canadians who are now living nine to 11 years past the time they are considered "healthy." As a result, these baby boomers must address certain vulnerabilities that they may face.

"These changing demographics present challenges that we haven't seen before in Canada," said Tony Maiorino, head of RBC Wealth Management Services. "Specifically, while we have always been keenly aware of the financial vulnerabilities faced by persons over the age of 65, our concerns lie equally with the growing demographic of Canadians who will no longer be able to manage their own financial affairs due to health issues. This means an increased need for resources and concern for those who have not planned for the possibility that they may be unable to act or make decisions for themselves. There is a growing urgency around this issue and Canadians need to be aware of it so they can plan ahead."

While the consequences of this gap have broader societal, health and legislative implications, "Mind the Gap" focuses on the financial wellbeing of Canadians who comprise this growing population.

"Without question, creating a Power of Attorney (POA) is a prudent course of action," said Maiorino. "While the document itself is an essential estate planning tool, of equal importance is who will take on the role. Appointing the most appropriate person or people to take on the role of attorney is a vital decision."

A Power of Attorney (Mandate in Anticipation of Incapacity in Quebec) is a legal document whereby one person (the "donor") gives one or more persons (each an "attorney") the authority to act on his/her behalf, either immediately or at a future time, for example after the donor becomes incapacitated. RBC Wealth Management identifies certain key factors Canadians should take into account before appointing their attorney:

Your attorney's financial acumen. While no one assumes that a trusted attorney would manage his/her money irresponsibly, if the person in mind is inexperienced in managing finances, he or she may not be as ideal a choice as someone who has financial experience or expertise.
Your attorney's location and ability to travel. An attorney needs to be able to communicate important and timely decisions. Even with the ease of electronic communications, he or she may be required to travel on short notice if an emergency arises
Your attorney's age and stage in life. Someone who is already of an advanced age today may not be healthy when you need them to act for you. This person could also be managing a busy career and family for the foreseeable future and may not have the time to dedicate to diligently attend to affairs as may be required.
Your attorney's organizational skills. Not only will the attorney be responsible for the record keeping pertaining to your POA, they may also have to manage their own POA. If the attorney is responsible, there is a good chance he/she will be equally responsible with yours.
Your attorney's potential for emotional bias. If your attorney is a relative, the person may have an emotional bias that prevents him or her from carrying out your wishes or have challenges when managing the expectations of other family members. Also, if the attorney is a family member, he or she may be in a potential conflict of interest if the spending for your care will affect his or her potential inheritance.

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