What you need to plan for when caring for aging parents

According to Statistics Canada, one in four Canadians provided care or help to a family member or a friend with a long-term health condition, a physical or mental disability, or aging-related need.¹

Taking on caregiver responsibilities can be especially stressful for Canadians in the “sandwich generation” as most of them still have careers to grow, children to raise and financial obligations to meet, in addition to providing care for aging parents.

When you are caring for an aging parent or an ill family member, the demands on your time and finances can add up quickly. While the shift to becoming a caregiver can be difficult, taking the steps now to prepare a thoughtful plan can help you provide your loved ones with the personal and financial support they need.

Here are five key steps that can help ease the transition to caregiving:

1. Don’t wait to have important conversations

It’s never too early to start conversations with your family members so everyone is on the same page when a care crisis occurs. Specifically, you should talk to your parents about their intentions for the future when they are still capable of – and willing to – manage their own affairs. Discussing mortality with your parents, in addition to understanding their financial plan for their golden years, can seem awkward at first. However, the longer you delay, the more emotionally charged those conversations can become, and the less time you’ll have to create an action plan. Including other family members in the dialogue helps to ensure everyone is engaged and aligned with your parents’ wishes. Discussion topics could range from choosing a primary caregiver and addressing family dynamics, to estate planning and general financial management.

2. Understand your parents’ financial picture

While finances can be a sensitive subject, being aware of your parents’ financial situation allows you to prepare and mitigate potential issues. From the number of bank accounts they have, to where legal contracts are stored (like Wills and deeds), you should be proactive by taking an inventory of your parent’s financial resources. How much they have and where the assets are located can be beneficial to help support your parents when an unexpected event occurs. If there is a risk that their retirement savings may fall short of their needs, re-examining their investment strategy or adjusting their planned cash flow may be options. If you think they will need your financial support at some point, then you will need time to plan accordingly.

You also want to look at tax consideration for caregivers. Depending on your situation, there may be tax credits and benefits to help offset the financial responsibilities of being a caregiver, like Compassionate Care Benefits, Canada Caregiver Amount, Disability Tax Credit and Home Accessibility Tax Credit. Talk to your tax advisor for more details.

3. Prepare for unexpected costs

Health costs can rise significantly as we age. Between the ages of 65 and 74, approximately one in eight Canadians require help as the result of a long-term health condition, but this figure jumps with age. By age 85, 37% of women and 24% of men are living in a retirement or nursing home.² Even if you are not looking at the long-term care option for your parents, speaking with a care advisor can help you determine the type of living situation best suited for them. Assisted living facilities and home accommodations/services can be expensive and come with their own benefits and challenges. Costs vary depending on the services required and by province. Creating an emergency fund can help you better manage and plan for unexpected events if you need to take an unpaid leave or modify your work schedule to care for your parents. Planning ahead for these possibilities can provide both you and your loved ones with greater peace of mind.

4. Where there is a will, there is a way

Many Canadians do not have a Will. In the event of their incapacity or death, they may be leaving their estate in disarray. Delays and unnecessary expenses can accumulate if there is no executor to act as the estate’s administrator. There is also a risk that the deceased’s wishes are left unclear or misinterpreted, which can lead to family conflict. Proper planning helps to ensure assets are distributed how your parents want, and in an orderly fashion that minimizes the tax burden on beneficiaries and the estate. If your parents already have a Will and a Power of Attorney, be sure these documents stay updated and make note of where they are safely stored so you can quickly locate them when required.

5. Consider your own caregiving goals

While it may be difficult to put your goals first while you are caring for others, planning is critical so you do not lose sight of your own goals and the care you may need in the future. When your needs are taken care of, you will be more effective at helping others. Take the time to take an inventory of your current and expected income, and ensure you have sufficient funds in retirement and build contingencies in your financial plan, not only for the care you may need when you get older, but also to provide care for someone else.

We can work with you to help create a plan for your family and your future that addresses the steps you need to take to achieve greater peace of mind and certainty for what lies ahead. Contact a Scotiabank advisor to learn more. 

Legal Disclaimer: This article is provided for information purposes only. It is not to be relied upon as investment advice or guarantees about the future, nor should it be considered a recommendation to buy or sell. Information contained in this article, including information relating to interest rates, market conditions, tax rules, and other investment factors are subject to change without notice and The Bank of Nova Scotia is not responsible to update this information. All third party sources are believed to be accurate and reliable as of the date of publication and The Bank of Nova Scotia does not guarantee its accuracy or reliability. Readers should consult their own professional advisor for specific investment and/or tax advice tailored to their needs to ensure that individual circumstances are considered properly and action is taken based on the latest available information.

¹ Statistics Canada, General Social Survey – Caregiving and Care Receiving, 2018.
² There is Money on the Table: Challenges and opportunities of marketing to an older population, Environics Analytics, April 2019.