A growing proportion of Canadians — and possibly many of your clients — are providing care and financial support to their elderly parents. And as these adults head into retirement themselves, this support could affect their financial wellbeing.
Planning for potential eldercare responsibilities in advance can make these challenges more manageable when they become a reality. And the sooner your clients begin planning, the better.
“We’re entering an interesting time,” says Jane Olshewski, manager of financial life planning with Investors Group Inc. in Winnipeg. “We’ll have retirees caregiving older retirees — I don’t think we’ve ever really seen that before. There are a variety of financial planning issues to take a look.”
There are health issues as well. A recent report on the quality of life in Canada, the Canadian Index of Wellbeing, acknowledges that caregiving can have a significant impact on an adult’s quality of life.
“Unpaid caregivers for adult family members are more likely to report poor health, depressive symptoms and high-risk health behaviours,” says the CIW Network, the public policy organization — headed by former Saskatchewan Premier Roy Romanow — that conducted the survey. “They have less time for leisure activities [and] report missing more days of work, taking more personal days and retiring earlier to provide care.”
The report found that in 2009, 27.8% of employed Canadians had responsibilities for the care of an elderly dependent; and 16.8% had responsibility for both childcare and eldercare. Some of your clients are likely struggling with this challenge.
> Encourage an open family discussion
The first step in helping clients plan for eldercare responsibilities is to encourage them to have a discussion with their parents or elderly relatives about the possibility of an illness or sudden need for care. This type of discussion can help clients get an understanding of their parents’ financial circumstances and the type of care the parents would prefer in the event that they become ill.
“The key is to have the discussion before any kind of need becomes critical,” says Olshewski.
> Incorporate caregiver expenses into financial plans
For clients who anticipate providing financial support to their parents, incorporate the costs into their long-term financial plans. Keep in mind that the cost of care can be steep, particularly if full-time care is required.
“As people get older, the amount of care increases,” Olshewski says, “and therefore the financial amount needed to pay for that level of care can increase as well.”
Determine the amount of support clients can afford to provide and, as they move closer to retirement, encourage them to stay on track with their own savings. Ensure they’re not dipping into the funds that will be necessary to meet their own basic needs in retirement.
> Help clients prepare for emotional adjustment
Money isn’t the only commitment clients should expect to make in helping their elderly parents. A survey of baby-boomer caregivers by Investors Group, released earlier this year, found that the time they were spending looking after their parents was causing more stress than the financial commitment.
“More than half of them were saying the time commitment, as well as the emotional demands, were a source of stress for them,” Olshewski says.
You can help by recommending clients look for ways to ease the stress, such as sharing responsibilities with siblings or other relatives.
> Offer to meet with the client’s parents
To take your role in the eldercare planning process a step further, offer to sit down with your client’s parents. Offer to look at the parents’ finances to ensure that they are in order, and talk to them about the costs associated with care. This can take pressure off clients, who may be uncomfortable approaching the topic themselves.