The number of people in Canada age 65 and older is now over four million. That's one in every eight people. What's more, according to a 2007 survey by Ipsos Reid, one in three Canadian boomers (between the ages of 45 and 60) reported being caregivers to aging family members. Forty-four percent of those surveyed also reported supporting children at the same time.
Not surprisingly, middle-aged women devote almost twice as much time a month as men do caring for an elderly parent — roughly 26.4 hours compared to 14.5 hours, according to Statistics Canada.
Caring for an elderly parent is emotionally, physically and financially taxing. Few employers offer flexible hours or paid time off for childcare, never mind caring for your parents. According to a 2006 Health Council of Canada Survey, roughly 41 percent of caregivers have used personal savings to provide care. Another 22 percent reported missing one or more months of work in order to manage caregiving duties.
If you've been avoiding talking to your parents about long-term care, you're not doing yourself - or your loved ones - any favours. Decisions about aging parents are best made proactively, long before a crisis situation arises. These discussions should be frank and focused; remember to involve the entire family and to review various care options and the resources that are available to pay for them.
Stretching your financial resources
Caring for an aging parent isn't cheap. According to Consumer Reports, offering to care for an aging parent in your home can add roughly $7,000 or more per year to your household expenses. This includes an increase in utility, food and transportation costs. If your aging parent lives out of town, expect to add an additional $392 to your monthly budget in order to cover travel, medicine, phone bills, meals and maintenance.
But that's just the start. Factor in the cost of lost wages and reduced retirement plan savings, and it's no wonder why many boomers are becoming increasingly worried about caregiving costs. As with any other aspect of financial planning, avoiding the issue only delays and often exacerbates the problem. With that in mind, the following are three ways to care for an aging parent, including some of the costs most commonly associated with each situation ...
1) Inviting a parent to live with you
Creating a granny flat in your basement might seem like a logical idea, but is it really the most affordable? When considering whether it makes sense to move an aging parent into your family home, start by creating a "caregiving budget." Tally up all of the estimated expenses and then determine how you will manage to cover these costs. Will the parent contribute? What about another family member? You'll also want to make sure that you're aware of any available caregiver income tax breaks. The tax savings that can result from claiming an aging parent as a dependant can be significant. For additional details on tax exemptions, consult a tax professional.
2) Assisted living facilities
Putting your parents into a home is one of the most difficult decisions that you'll ever have to make. Before you do it, make sure you know what services are provided and which are not. While assisted living facilities provide private living quarters and 24-hour staff, they do not generally offer the same level of skilled nursing services as those available at a proper nursing home.
The search for a suitable assisted living facility can be a long one; don't wait to get started. An aging population means that demand is high and the supply is constantly dwindling. Many homes already have long waiting lists for new resident admittance. As such, it's best to begin your search the minute an aging parent begins to show signs of declining physical or mental health.
3) Providing your parents with financial assistance
As hard as it is to say no to your aging parents, it's important that you don't jeopardize your own financial stability in order to care for their needs. To address the issue early on, encourage your parents to share their financial information with you. You will also need to know the location of important documents, such as their will, marriage and birth certificates, mortgages, debts and tax returns. You'll need this information, along with the contact details of any advisors (financial, legal, insurance, etc.) in order to manage their affairs - and your own - responsibly.
You may also wish to sit down with your parents and calculate their net worth. This will enable you to develop a reasonable budget. Understand, however, that it may be difficult for your parents to share their financial information with you. They may consider this information private or be ashamed of their situation. Remember to be caring and compassionate at all times.
Decisions about aging parents are never easy. However, the benefits to taking a proactive planning approach are huge. Not only will you have peace of mind knowing that your parents' needs are being met with care, but you'll also have the financial foundations in place to handle unexpected expenses.
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Nothing contained herein is intended to provide personalized financial, legal or tax advice. Before implementing any financial strategy, you should obtain information and advice from your financial, legal and/or tax advisers who are fully aware of your individual circumstances.