Tax Articles
Caring for aging parents
May 2005, BDO Dunwoody Money Guide
Within a decade Canada’s unofficial color will be grey. In 1996, 3.5 million Canadians, or one in nine, were over the age of 60. By 2020 the number of seniors is expected to hit 7.9 million, almost one in four Canadians. As a result, baby boomers, themselves contemplating retirement within the next 15 years, face the prospect of caring for aging parents sooner rather than later.
Moreover, taking care of one’s parents is shaping up to be a long-term commitment. Thanks to modern technology and health care services, Canadians are living longer. In 1960 the average life expectancy for men was 64 and women 67. By 1999 the bar had moved up to 73 and 76 for men and women respectively. By 2020 life expectancy is forecast to increase an additional five years for each sex. It’s not unreasonable for most middle-age Canadians today to expect to live into their late 80s and early 90s.
That’s why the time to start planning for your parents’ future is right now.
The first step is to sit down and talk to your parents. Understandably, some might be reluctant. After all, no one wishes to contemplate their own mortality. But as uncomfortable as it may be, it’s important to learn their wishes while they can still make their own decisions.
Some of the things you need to talk about include:
-
What do you expect from your parents, and what do they expect from you;
-
Medical care decisions, especially their wishes if they’re left incapacitated;
-
Financial planning and how they can protect their assets;
-
Estate planning, especially ensuring all documents such as wills and trusts are in order.
Where possible, all immediate family should be consulted and take part in the planning process. All parties should have such key information as the location of important documents, and the names and phone numbers for key individuals such as the financial planner and lawyer.
Such planning could save Canadians great anguish and stress as it is now apparent more and more seniors will have to rely on their children for financial assistance. Although the Canada Pension Plan (CPP) and Old Age Security (OAS) are judged adequate to meet future demands, even today they rarely provide enough to ensure seniors don’t slip into poverty.
According to the Public Health Agency of Canada (PHAC), in 1996 half of families headed by a senior had an income below $33,700. Half of seniors living alone had an income below $15,000.
That same year almost one-half of seniors living alone had incomes below Statistics Canada's low-income cut-off; more than one-half of women aged 65 and older who were living alone had incomes below the cut-off.
Fortunately, time is on most families’ side, as Canadian seniors are a most robust generation. With professional assistance, their children can ensure their parents retirement years are golden.
