How to take care of aging parents and yourself: Ideas to help women protect their financial future and their aging loved ones
Caring for an aging parent is a compassionate—but often stressful—undertaking. It can take a huge emotional toll on everyone in a family, especially for women.
“Women often become caregivers for an elderly parent,” says Adriana Meixner, Director of Research, Fidelity Investments Canada. “Research shows women who become caregivers are twice as likely to end up living in poverty than if they aren’t caregivers.”
If they take time off work, not only do they lose pay, but those lost wages can affect their retirement savings (CPP – Canada Pension Plan, pension payouts, etc.) and other savings—threatening their future finances.
Nearly half of caregivers report high emotional stress1. So what can women do to take care of themselves while they care for others? There are steps you can take to protect your finances and your retirement. And because women tend to live longer, every penny counts.
Understand the long-term impact
“For many women, fewer contributions to pensions and other retirement savings vehicles are the result of reduced hours on the job or fewer years in the workforce,” explains Adriana Meixner. “Women caregivers are likely to spend many years out of the workforce raising children and caring for an older relative or friend.”
Women enter and exit the workforce more often than men, usually to care for their children or their parents. Others make some sort of workplace accommodation, such as going in late or leaving early, shedding job responsibilities, dropping back to part-time status, or opting for reduced hours, when possible. This can mean lower wages, lost income, and missing out on potential promotions, which can add up.
Consider this example from the U.S.: Laura, age 56, left a $70,000-a year job to care for her mother for three years. The cost to her: $287,000 in lost salary and $63,000 in lost U.S. Social Security benefits, for a total of $350,000.2
In Canada, the situation is very similar. Women are often taking time out of the workforce, and like their U.S. counterparts, the long-term price can be high. You lose the opportunity to contribute to an employer workplace retirement saving plan, as well as contributions from your employer. These periodic absences can also significantly slice into your CPP benefits.
Explore all your options to keep working
Because leaving a job means losing not only your paycheck but also your benefits, try to continue working at least until you’re vested in your company’s pension or profit-sharing plan. You may be able to scale back your hours, but put in enough time to continue to get benefits and retirement plan contributions. Also, check with your employer’s human resources manager to see whether the company offers services to employees who are also caregivers.
You may also look into local services in your community that might help you find a way to balance your job with your caregiving responsibilities.
If you are still able to work for a while longer, then be sure to participate fully in your employer’s workplace retirement savings plan and any matching contributions if offered.
If you must give up your current job in order to become a full-time caregiver, and are married and have the support of your spouse/common-law spouse, take advantage of a spousal /common-law partner RRSP to help keep your retirement savings growing. And, fund these accounts to the limit, if you can.
Additionally, if you are caring for an elderly dependent, you may be entitled to claim various federal and/or provincial caregiver tax credits. Consult your tax advisor, as he or she will factor in all of your circumstances, including your goals and your tax situation.
Beware of taking on too much on your own
While sons and daughters care more or less equally for their parents, a MetLife study3 in the U.S. found that daughters tend to take care of physical caregiving, while sons tend to help financially. Despite this, the disparity comes with long-term financial consequences for daughters.
For example, if you’re a woman providing more hands-on assistance, you’re likely to be the first to notice that the supply of nutritional supplement is running low or that it’s time for your father to begin using a walker. And, if you’re providing more hands-on assistance, it’s natural to reach for your own wallet to cover the costs. Yet, such miscellaneous expenses can cost an average of $12,000 a year, according to the MetLife research, and can seriously eat into the money available to set aside for your retirement.
Find time for yourself
Research from the U.S. organization, the National Alliance for Caregiving shows that, on average, adult caregivers spend nearly 19 hours a week in their helping role—or nearly three hours a day4.
Given this, it’s important to remember to protect your own health. That’s especially important for women, who are more likely than men to feel the emotional stress of giving care, says the National Alliance for Caregiving study. Stress can affect your mental and physical health, as well as your ability to work productively—with unpleasant repercussions for your financial health too.
While it’s natural for women to want to do all they can for their aging loved ones, the most important lesson to take to heart is this: Taking care of yourself first will enable you to do a better job of taking care of others.
Adriana Meixner, Director, Research
Fidelity Investments Canadais a leading provider of investment solutions for individuals and businesses in Canada. For over 70 years, including 30 years in Canada, Fidelity Investments has helped investors worldwide meet their financial goals by providing top investment solutions managed by worldclass portfolio managers. To learn more, visit www.fidelity.ca.