It’s a fact of life that more Canadians are caring for their elderly parents, and many of them are also looking after their own children at the same time. According to a survey conducted by Ipsos-Reid, one in three Canadians between the ages of 45 and 60 are providing care to older family members. The brunt of this unpaid care giving falls squarely on the shoulders of middle-aged women. Statistics Canada has released figures which show that women within this age group are spending 26.4 hours a month caring for an elderly parent.
Given these figures, the question becomes not will you be looking at providing care for your parents in their later years, but when. This is one of the scenarios which your overall financial plan should address.
Your Financial Plan and Caring for Aging Parents
If you have to take time away from work to care for an aging parent, you may find that you exhaust your annual leave and paid personal days quickly. The employment insurance plan will provide Compassionate Care Benefits if you need to be away from work temporarily to care for a gravely ill relative when there is a significant risk of death.
Even if you qualify for EI when taking time off work, these benefits only replace a certain amount of your income. What can you do to make sure is that you minimize the loss of income and caring for a parent.
The key is to start planning for this eventuality now. Make contributions to your Tax-free Savings Account (TFSA) each year. You can contribute up to $5,000 per year to your plan and the funds can be invested in stocks, bonds, mutual funds, or held in a cash account until you need them. The money grows inside the plan on a tax-free basis and you do not pay taxes on withdrawals from the plan.
Plan for Your Own Golden Years
Along with making a plan for caring for your elderly parents, you will want to ensure that you have resources in place in case you need care later on. Your own financial plan should include long-term care insurance and critical illness coverage.
Long-term care insurance is put in place to help defray the cost of a stay in a nursing home or residential care facility, as well as services provided by caregivers in your own home. Not everyone requiring long-term care is a senior citizen; this coverage can be used to provide benefits if you become disabled as a result of illness or injury.
Critical illness insurance coverage pays a lump sum benefit if you are diagnosed with a disorder covered under your policy, including cancer, heart disease, and stroke. If the money is paid out as a lump sum and you can choose to use it for whatever purpose makes sense to you, then some recipients use the funds to cover medical expenses not paid for under their provincial health plan, while others rely on this coverage to replace income.
If you are caring for elderly parents or want to have a plan in place for this eventuality, please contact me. I would be happy to review your overall financial situation and help you come up with a plan that works.