The only constant in life is change and in the twenty years I’ve been working with clients, I’ve seen people's health change faster than they expected.

One year you're hiking in Kananaskis and the next a knee replacement can change what your retirement looks like.

That's why your health deserves its own dedicated bucket, one built to help you weather the storms of unpredictability.

I thought I could do a deep dive into our Health Bucket, what it's designed to cover, and how retirees can prepare for health care costs that will eventually show up later in life.

Alberta Health Care Doesn't Cover Everything

Many Canadians assume their health care is taken care of.

And a lot of it is like medically necessary doctor visits and hospital stays.

Depending on your coverage though, many of the costs that come with aging may or may not be fully covered:

• home modifications

• extra medical care at home
• private retirement residences
• travel medical insurance for snowbirds
• accommodation fees in continuing care
• dental work, hearing aids, and some prescriptions

Those costs are unpredictable and they’re going to be even more unpredictable because our health care system is morphing into a two-tiered private/public system.

What Is the Health Bucket?

I like to define the Health Bucket as money set aside specifically for health and care costs in retirement.

It's not there for you to spend or invest in, it’s there for those moments you hope will never come and the moments you know are coming.

One of the biggest fears Canadians have about retirement is:

"If I get sick, will I be able to afford to pay for the quality of care I want?"

The Health Bucket is designed to answer that question before you ever have to ask it.

Why Health Needs Its Own Bucket

We always hope you don’t have a medical event, but if you do, somewhere along the way you will probably have to pay for it somewhere.

Usually, that means one of two places:

1. You dip into your Income Bucket and the lifestyle you planned for starts to shrink.

2. You sell from your Growth Bucket, sometimes at the worst possible time, like when the markets are down.

Neither option feels good when you're already dealing with a health scare.

That’s why we believe having a separate bucket keeps a health crisis from turning into a financial crisis.

Your Income Bucket supports the life you're living today.

Your Growth Bucket protects the life you'll live tomorrow.

Your Health Bucket protects them both.

Have a Plan Before a Crisis Decides for You

Most families don't talk about care until they have to.

And we can never know what’s around the corner.

But knowing that you have a plan in place can take a load off your worries.

On a recent episode of More Than Money, Salimah Walji-Shivji, CEO of AgeCare, walked through Alberta's continuing care system, the different levels of care, and what families should know before a decision has to be made in a crisis.

The real value of planning ahead is knowing the money is already set aside, which gives you a choice and the comfort of having options.

How Much Should You Set Aside?

Everyone's situation is different.

The right number depends on questions like:

• Where do you want to live as you age?
• What does your family health history look like?
• Would a family member be able to help with care?
• Do you have insurance that could cover some of these costs?

Some retirees will never use most of their Health Bucket.

People will say that it’s a waste but in my experience the peace of mind outweighs the negatives.

And whatever you don't spend on health is still yours to use elsewhere in your plan.

Health Is Wealth

You spent decades building your wealth.

But wealth only means something if you're well enough to enjoy it, and cared for when you're not.

A Health Bucket won't stop change from coming, but when something does happen, you’re more than ready to weather the storm.

At PKAG, we help Canadians build retirement plans that prepare for the unexpected, including the health changes that come with getting older.

If you have any questions, feel free to contact us.

You can also book a meeting with us and we can go over your plan in person.

We also have a free, no-obligation seminar coming up on October 6, where we'll discuss how to protect your income, your health, and your legacy in retirement.

We look forward to hearing from you.

This is the third post in our series on PKAG's Four Buckets: Income, Growth, Health, and Legacy. If you missed the first two, you can catch up on the Income Bucket and the Growth Bucket.

This commentary is intended to provide general information and should not be construed as tax, legal, financial, or other advice. Individual circumstances and current events are critical to sound planning; anyone wishing to act on the information presented should consult with his or her tax, legal or financial advisor.

This information, including any opinion, is based on various sources believed to be reliable, but its accuracy cannot be guaranteed and is subject to change. David Popowich, Faisal Karmali, Leanna Wachniak, Robert Gerrie are Investment Advisors with CIBC Wood Gundy in Calgary. The views of David Popowich, Faisal Karmali, Leanna Wachniak, Robert Gerrie do not necessarily reflect those of CIBC World Markets Inc. CIBC Private Wealth consists of services provided by CIBC and certain of its subsidiaries, including CIBC Wood Gundy, a division of CIBC World Markets Inc.