According to Statistics Canada, one in four Canadians provides care or help to a family member or a friend with a long-term health condition, a physical or mental disability, or an aging-related need.¹
Taking on caregiver responsibilities can be especially stressful for those in the “sandwich generation” as most still have careers to grow, children to raise, and financial obligations to meet, in addition to providing care for aging parents.
When caring for a 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 steps now to prepare a thoughtful plan can help you provide your loved ones with the personal and financial support they need.
Not sure where to start? 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 talking with your family members to ensure everyone is on the same page when a care crisis occurs. Specifically, talk to your parents about their intentions for the future when they’re still capable of managing their affairs.
Discussing mortality with your parents and 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 ensure everyone is engaged and aligned with your parent’s wishes. Discussion topics could range from choosing a primary caregiver and addressing family dynamics to estate planning and general financial management.
Did you know?
- Nearly half of caregivers in Canada are primarily caring for a parent or parent-in-law.
- 54% of caregivers in Canada are women.
- Two-thirds of caregivers are 45 or older.
- One in three caregivers provides one to three hours of care per week.
Source: Statistics Canada, General Social Survey – Caregiving and Care Receiving, 2018.
2. Understand your parents’ financial picture
While finances can be sensitive, being aware of your parents’ financial situation allows you to prepare and mitigate potential issues. From the number of bank accounts to where legal contracts are stored (wills and deeds), be proactive by taking an inventory of their financial resources.
How much they have and where the assets are located can help support your parents when an unexpected event occurs. If there’s 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’ll require your financial support at some point, you will need time to plan accordingly.
3. Prepare for unexpected costs
Health costs can rise significantly as we age. Between 65 and 74, approximately one in eight Canadians require help due to a long-term health condition, but this figure jumps with age. By age 85, 37% of women and 24% of men live in a retirement or nursing home.2 Even if you’re 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 benefits and challenges. Keep in mind that costs vary depending on the required services and province.
Tax considerations for caregivers
Depending on your situation, tax credits and benefits may be available to help offset the financial burden of being a caregiver. Consult your tax advisor for more details.
- Compassionate Care Benefits
- Canada Caregiver Amount
- Disability Tax Credit
- Home Accessibility Tax Credit
Creating an emergency fund can help you better manage and plan for unexpected events if you need to take unpaid leave or modify your work schedule to care for your parents. Planning for these possibilities can provide 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 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 note where they’re safely stored so you can quickly locate them. You can ask your Scotia Wealth Management relationship manager about how Scotiatrust® can help with estate planning, trustee services, or with solutions for Executors and Powers of Attorney.
5. Consider your own caregiving goals
While it may be difficult to put your goals first while caring for others, planning is critical so you do not lose sight of your 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, ensure you have sufficient funds in retirement, and build contingencies in your Total Wealth 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 formulate a roadmap for your family, your business, and your future with a Total Wealth Plan that addresses the steps you need to take to achieve greater certainty for what lies ahead.
While it may be difficult to put your goals first while caring for others, planning is critical so you do not lose sight of your 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, ensure you have sufficient funds in retirement, and build contingencies in your Total Wealth 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 formulate a roadmap for your family, your business, and your future with a Total Wealth Plan that addresses the steps you need to take to achieve greater certainty for what lies ahead.
Contact a Scotia Wealth Management relationship manager to learn more.
