Start saving to pay for your aging parents’ healthcare

While your parents are still independent and enjoying their day-to-day, it might be a good time to start preparing to take a more active role in their care, when that day comes.

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You’ve likely been busy saving for your kids’ university tuition and topping up your retirement fund—but will you also need to look after your parents as they grow older? While your parents are still independent and enjoying their day-to-day, it might be a good time to start preparing to take a more active role in their care, when that day comes.

Canada’s cohort of seniors is not only growing, but requiring an increasing amount of assistance from their families. By 2026, more than 2.4 million Canadians over age 65 will require paid and unpaid continuing care support—up 71% from 2011, according to the Conference Board of Canada.

And these healthcare and living expenses for seniors can be significant.

While your parents are still enjoying their independence, it’s not too late to save. Here’s how to ensure your parents are comfortable and financially taken care of when the time comes:

Have an open conversation about finances

This may be the most intimidating step, as many parents and adult children do not speak openly about money matters. But it’s vital to the future. Before any care is required, sit down with your parents for an honest conversation about their financial picture and their vision for the future.

“One of the first things that should be done is a full review of their finances. What is their income, what are the expenses, do we have enough each month to pay what needs to be paid out?” explains Jandy John, Director of Business Development at Wyth Trust.

Review their pensions and other income

This initial conversation should also include taking account of any pension benefits they’re receiving from the government or an employer-sponsored pension plan.

In some instances, your parents may have other income you aren’t aware of yet. “You should also ask about any dividend payments or other investment income they may receive, including where they have accounts,” as Jandy explains, since you may potentially need to get access to these in the future when managing their assets.

Learn what they want—and assess the costs

“You’ll also want to ask them about their plans,” Jandy advises. “For example, are they hoping to stay in their home as they age? Would they prefer to live with you? Would they rather live in a retirement community with other seniors?”

The answers to these questions will go into your financial planning. “In particular, this will help you determine whether there is a shortfall, and then determine how much future care will cost, and what you’ll need to set aside,” she continues.

Make a budget

Next, it’s time to estimate all the expenses to care for your aging parents. Some of these may be estimates for the future, but it will allow you to get a ballpark figure as your parents’ needs change. For example:

  • Hiring a personal support worker to help seniors in their home or yours on a full or part-time basis can cost between $28-35 an hour in Ontario, for instance, while having a registered nurse come in will cost you $55-80 per hour.
  • The cost of a private room in a retirement home in Ontario is between $1,500 and $6,000 a month.
  • Co-pay fees for prescription and non-prescription medication, glasses, dental expenses and physio aren’t covered by government plans or private health insurance (which may also cost seniors several hundreds per month)

Face the facts—and find a trusted partner

Only 29% of Canadians have discussed a health and long-term plan with their partner or family. And for those aged 55+ who haven’t had the talk, 22% say it’s not something they like to think about either. (Who’s to blame them?)

“Planning for both your parents’ financial needs along with your retirement and your kids’ futures can feel overwhelming,” Jandy empathizes. “But helping them out doesn’t mean you have to be an expert in all things tax, investment and personal finance. That’s where expert help comes in.”

Evaluate how these expenses will fit into your overall family budget, and if you have the funds to cover all the costs. If you don’t, this is the time to discuss options with a trusted professional, such as a financial planner, banker or investment advisor, who will work with you to answer questions and update your financial plan to account for expenses related to your parents’ future care.

Set money aside

“While it’s unlikely you’ll need your money tomorrow, it’s important that funds earmarked for your parents’ needs are easily accessible and held in accounts that are not subject to the swings of the market,” Jandy says. You want your money to be there when you need to react (and it’s nice to earn some interest in the meantime!)

Consider parking a lump sum in a Guaranteed Investment Certificate (GIC) or High Interest Savings Account to earn some interest while retaining access to the funds in the medium term. These accounts can be easily opened online within a few minutes.

Make a smart move

If you’ve decided to move your parents into your home, options for funding the move may include taking out another mortgage, leveraging your home’s equity, opening a line of credit or using funds from the sale of your parents’ property to pay for a renovation.

“When property is involved, make sure you take family dynamics into account,” says Jandy. “Consider implementing agreements or contracts with your siblings outlining the arrangement, including how much your parent has contributed to the renovation or purchase of a new property.”

Get things in writing

Having written understanding between family members will prevent any disputes later on if the asset ends up as part of an estate. “To have that communication and to have a clear plan and how things should happen, that helps a lot,” Jandy concludes.

While it may not be something you want to think about today, taking the time to prepare for your parents’ future care now will be worth the effort. By putting money aside, getting up to speed on their wishes and talking to the experts, it will ease your family’s stress when it does come time to make these decisions.

How Wyth can help

Wyth Trust is here to help you and your family navigate complex estate and trust needs.

For short-term, accessible savings, open a Wyth Financial High Interest Savings Account (HISA) online in just minutes. 

Our Wyth Financial Guaranteed Investment Certificates (GICs) are safe and secure with a fixed rate, when you’re planning to save for the medium-term (over one year).