When COVID-19 hit in the middle of March its immediate effect not only shocked investors in general, but also sent a major blow to Canadian seniors in particular, many of whom were already on tight budgets when the stock market plunged.
“We have heard some really heart-breaking stories about people having to make decisions about everyday necessities, about whether they can afford something.” - Marissa Lennox
“We have heard some really heart-breaking stories about people having to make decisions about everyday necessities, about whether they can afford something,” said Marissa Lennox, chief policy officer at CARP. “They had to make decisions between their hydro bill or medication. No one should be put in that predicament to have to make difficult choices like that.”
Seniors, like other investors, were taken aback when the Toronto Stock Exchange ended its worst quarter in over a decade in the spring. Those over 70 were told to stay home to avoid becoming infected from COVID-19, so they now had to add to the bill the rising costs for groceries – plus their delivery, as well as higher costs for medication and minimum withdrawals from their RRIFs or LIFs.
Higher dispensing fees for medication
Lennox said CARP has received many complaints from seniors about higher dispensing fees on prescription medication. Rather than paying the regular fee for a three-month supply of medication, they are now receiving only a one-month stock to prevent shortages – but at the same three-month price. Lennox said some seniors require anywhere from four to 10 medications, multiplying the cost exponentially.
But she said there have been some moments of goodwill for seniors. For example, she said Rexall pharmacy has cut its co-payment to seniors by one-third.
For a number of years, seniors have been asking the federal government to remove the minimum withdrawal on RRIFs and LIFs altogether, but so far, nothing concrete has come of this.
“Next to long-term care, the RRIF issue is the top issue among our membership right now,” said Lennox.
The retirement savings of many seniors plunged when the stock market nosedived, putting those in the deaccumulation stage in a tight spot. Even more worrisome for some is that some experts believe it could take a couple of years for the economy to return to pre-COVID times.
It was a welcome relief then when the federal government temporarily lowered the minimum amount that had to be withdrawn from a RRIF or by 25% for 2020 to help seniors during the pandemic. (The regular RRIF withdrawal factors will apply again starting in 2021.)
“This is a big one for our members,” said Lennox. “They want to be in control of their retirement savings and especially now when we have seen such a steep decline in the markets with extreme volatility and no end in sight. People don’t want to be rearranging their portfolios.”
Federal government help
Ottawa did come to the rescue recently by promising a one-time increase of $300 to those on Old Age Security (OAS) and an additional $200 for those on the Guaranteed Income Supplement (GIS).
The federal Liberals had promised in the election campaign to increase the OAS pension in July, but will not confirm whether that will go ahead.
While the current boost is a welcome stop-gap measure, there should be relief for seniors who need their money for the longer term, said Laura Tamblyn Watts, CEO of newly formed CanAge, a cross-Canada seniors’ advocacy group.
“There’s really a lack of clarity as to why this would be a one-time measure. There’s certainly no sense that things will cost less [in the future] and all of the other relief measures are on a rolling basis.”
Increase in elder financial abuse
Another issue causing much concern is the rise in elder financial abuse, said Tamblyn Watts. Before COVID-19, about one in five Canadian seniors were subject to elder abuse, the most common of which is financial.
“What we are seeing now is a significant spike in that number since the middle of March,” she said. “The people who are getting the calls about this and are responding to elder abuse and neglect are seeing about a 10 times increase in abuse and that financial abuse is the most common.”
Tamblyn Watts, who also sits on the board of Elder Abuse Ontario, says the provincial agency received about 800 calls a month pre-COVID on financial elder abuse, but is now reporting that number every three or four days.
A number of organizations, including the Investment Funds Institute of Canada, have put together webinars and presentations on how financial advisors can spot financial abuse among their senior clients and what they can do to help.
She notes advisors are allowed to report these kinds of incidents, pointing to an exclusion in the Personal Information Protection and Electronic Documents Act (PIPEDA).
Tamblyn Watts says financial advisors in the securities sector have received training on how to deal with financial elder abuse issues, but not so much in the insurance area.
“The investment sector has been in front of this, and the insurance sector is interested a lot, but hasn’t yet put into place some of the resources for their advisors that they might get if they were dually licensed.”
Social exclusion
Many seniors are also feeling social exclusion for the first time in their lives as people over 70 were told to stay home and self-isolate during COVID-19. “This was an eye opener for many people who never thought of themselves as being vulnerable in any way,” says Tamblyn Watts.
Many financial advisors took to the phones when the pandemic hit to keep on top of clients’ issues while others are also using video-conferencing platforms like Zoom or apps like FaceTime, as those in and outside the industry learn to help lonely relatives and friends reach out during the pandemic.
With long-term care facilities among the hardest-hit COVID-19 areas in the country, Tamblyn Watts says insurance and other financial products may take on a larger role to help pay for family members who now want to “age in place,” as well as the kinds of home modifications and help it will take to look after them.
