FRP Step # 4 - Health Care Planning

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Step 4 of the Fundamental Retirement Plan: Health Care Planning

When most people think of retirement planning, their minds go straight to investments, income, or taxes. But one area that often gets overlooked and can have a huge impact on your financial security and quality of life is, health care planning.

That’s why Step #4 of our Fundamental Retirement Plan (FRP) is dedicated to health care.

In this step, we look at:

• The health care system as it exists today

• Why Canadians often underutilize credits and benefits

• A real-life example where proper planning avoided a $25,000 annual expense

• The questions we ask prospective clients (and why they matter)

• The action items you should consider right now

The Reality of Health Care in Canada

We’re fortunate to live in a country with universal health care. While the system has its challenges like long wait times or shortages of practitioners in some regions it does cover most of your medical needs throughout retirement.

But it isn’t “free.” Between 20%-30% of every tax dollar goes toward health care. If your household paid $50,000 in taxes last year, you likely contributed $10,000–$15,000 into the system.

And while the government provides a strong foundation, retirees often face out-of-pocket costs for prescriptions, dental, home care, or long-term care. According to a Conference Board of Canada study, these expenses are projected to grow 1.5 times faster than retirees’ household incomes between 2019 and 2035. 

That’s a real concern for anyone wanting to protect both their retirement lifestyle and their dignity as they age.

Tax Credits and Benefits You Might Be Missing

The government does offer programs such as:

• Canada Caregiver Credit

• Disability Tax Credit

• Medical Expense Credit

• Home Accessibility Tax Credit

On top of these, each province has its own credits and benefits many of which are income-tested. Unfortunately, these are often underutilized or overlooked in tax filings. That’s why it’s critical to approach health care planning as part of an integrated retirement plan.

Decisions you make around income and taxes (Steps 2 and 3 of the FRP) can directly affect your eligibility for these programs.

A Real-Life $25,000/Year Example

We worked with a couple where one spouse had a prescription drug cost of $2,100 per month. Through Saskatchewan’s Seniors Drug Plan, this cost could be reduced to just $25 per month but only if the household’s taxable income stayed below $75,918.

By carefully structuring their retirement plan, we:

• Reduced taxable distributions from investments

• Delayed CPP and OAS for four years

• Drew down registered accounts strategically

• Implemented spousal income-splitting strategies

These steps preserved access to the drug plan and saved the household from an additional $25,000 annual expense. Without planning, those benefits would have been lost by age 71.

What We Cover in Step 4: Health Care Planning

Health care planning goes beyond numbers. It’s about asking the right questions and tailoring strategies to your personal situation. Here are four key areas we focus on:

1. Understanding You

We ask questions most financial planners don’t:

• Do you take any prescriptions?

• Do you have chronic illnesses or hereditary conditions?

• How does your health outlook affect the timing of CPP and OAS?

These conversations help ensure we’re building a plan around your reality—not a cookie-cutter solution.

2. Coverage Gaps

We review drug plans from past employers, post-retirement insurance, and the rising costs of travel coverage. For many retirees, fulfilling travel dreams is important, but medical history and age can make premiums skyrocket. Identifying these gaps early is key.

3. Long-Term Living Plans

We explore your 10-, 20-, and 30-year vision:

• Do you want to age in place, downsize, or relocate?

• What would have to happen for you to consider a retirement community?

• What if a sudden medical event reduced your independence?

While uncomfortable, these “what if” scenarios are essential for future planning and tie directly into Step 5: Estate Planning.

4. Stress-Testing the Plan

We run scenarios:

• Could your portfolio support an unexpected health care expense?

• Would your lifestyle need to change?

• Would selling your home become necessary?

We also emphasize the importance of trusted contacts someone we can reach out to if we’re ever concerned about your well-being or decision-making capacity.

Why This Matters

Health care planning isn’t just about today’s costs it’s about preparing for the future while protecting your retirement lifestyle. A plan that ignores health care leaves retirees vulnerable to financial strain and tough choices later in life.

At our firm, we pride ourselves on going deeper than investments. Yes, portfolios matter, but they’re only one piece of the bigger picture. Our approach is personal, holistic, and designed to give you peace of mind in retirement.

Your Action Items

1. Don’t delay the conversation. Even if you’re healthy, start planning for future health care needs and costs now.

2. Review tax credits and benefits. Make sure you’re not leaving money on the table.

3. Consider the long term. Think about where and how you want to live in 10, 20, and 30 years.

4. Work with someone who looks beyond the numbers. A strong plan connects income, tax, investments, and health care into one unified strategy.

Planning for health care is about more than covering expenses it’s about ensuring you can enjoy your retirement years with confidence and dignity.

If you’d like to take the next step in your retirement planning journey, visit retiringcanada.ca to learn more about the Fundamental Retirement Plan and how it can work for you.

And hey, when it comes to your retirement, don’t take chances. 

Make a plan so YOU can retire with confidence.

All comments are of a general nature and should not be relied upon as individual advice. The views and opinions expressed in this commentary may not necessarily reflect those of Harbourfront Wealth Management. While every attempt is made to ensure accuracy, facts and figures are not guaranteed, the content is not intended to be a substitute for professional investing or tax advice. Please seek advice from your accountant regarding anything raised in the content of the podcast regarding your Individual tax situation. Always seek the advice of your financial advisor or other qualified financial service provider with any questions you may have regarding your investment planning.