Lifestyle | The caregiver who needs help

How to organize your finances when you become a caregiver and have to stop working earlier than planned.

The situation

Emilia*, 60, recently became a caregiver to her mother and sister.

“I need your advice, because their needs will increase further in the coming year,” she wrote to The Press.

“I reduced my working hours, but now I can’t do it anymore. I’m already exhausted. I should retire as soon as possible. »

For the moment, his 82-year-old mother has Alzheimer’s and lives in a private residence for seniors (RPA). Within two years, she will have to move to a specialized place for people losing their autonomy.

Her 52-year-old sister, who has advanced lung cancer, still lives in her apartment while receiving palliative care.

Both live 45 minutes by car from Emilia. The caregiver therefore has to travel many kilometers to do their grocery shopping and accompany them to their medical visits.

Before dying of fatigue, Emilia wants to retire. On the other hand, she does not have a pension fund waiting for her, but savings that she has carefully invested over time with the help of a financial services firm.

No work on his house is planned, since the property is only three years old. However, he still has a mortgage of $330,000 amortized over 30 years. The sixty-year-old has no other debt.

Because of her family history, Emilia wants the analysis of her financial situation to be carried out assuming a life expectancy of 90 years instead of 95 years.

“I estimate that my retirement lifestyle will be $65,000 net. I would like to know if this goal is realistic or if I can afford more, because I have other plans. »

Emilia spends $5,000 per year on travel and would like to travel more. She also plans to replace her car in four years and calculates that she will have to pay $35,000 net for this purchase. Finally, she wishes to pay for orthodontic care for her two granddaughters, estimated in total at $15,000.

“I have a partner, but we each have our own house. By moving in with him, I would save $12,000 net per year, but I plan to do this in four years… not before. »

The advice

Charles Rioux-Rousseau, practice development and quality advisor at the Financial Planning Institute, analyzed the file with the help of a caregiving specialist, Maude Lévesque, regular professor at the School of Financial Planning. social work from UQAM.

“The two people being helped do not depend on Émilia for finances, which is good news,” observes Maude Lévesque.

The caregiver specialist, however, advises Émilia to register her mother quickly at the access desk for home help services for seniors. On the SAPA website, Support for the Autonomy of Elderly People, there is a section for home support and a section for the residential and long-term care center.

Maude Lévesque suggests that Émilia make both requests now.

“We must not delay. It’s a nightmare to access it,” says the specialist.

Emilia’s sister can benefit from services more quickly, says Maude Lévesque, because her doctor has already done the assessment.

“When you make a request to the SAPA counter, you describe the situation over the phone and then it takes weeks to get a call back and, then, up to a year to get the assessment. It is after the assessment that one is eligible for services. »

While waiting for public services, Emilia must make sure there is no danger where her mother lives, she advises. “Does she have a neighbor who can come and take a look at her house? If there is no neighborhood, the risk rate has just increased. »

Maude Lévesque recommends making a request for a place in a CHSLD as quickly as possible, because when the request is made urgently, the person must take the first place that becomes available.

The specialist also suggests that Émilia take advantage of the respite services for caregivers from APPUI, a non-profit organization funded by the Quebec government.

Tax credits

Regarding her finances, Émilia can check with her accountant if she can benefit from tax credits for caregivers.

Provincially, there is the refundable tax credit for caregivers who support an adult with a serious and prolonged impairment or a parent aged 70 and over.

“It is the income of the person being helped that is taken into account to determine whether the caregiver will be entitled to credits,” explains Charles Rioux-Rousseau.

At the federal level, the non-refundable Canada Caregiver Credit (CCAN) is more restrictive. The person being helped must be the spouse or a dependent.

“The Chair in Taxation and Public Finance makes available a very well-designed calculator for these types of credits,” says Charles Rioux-Rousseau.

Consult the calculator of the Chair in Taxation and Public Finance

What retirement income is possible?

Emilia wants to stop working now so she can have enough energy to take care of her mother and sister.

Financial planner Charles Rioux-Rousseau ran a few scenarios.

“As she has an aggressive portfolio with a lot of stocks, I extrapolated her situation with a return of 4%, he explains.

“She wants a net cost of living of $65,000 per year, so I started with that assumption for the calculations. »

Taking into account all his investments as well as the retirement pension from the Pension Plan of Quebec and the Old Age Security (OAS) pension taken from age 65, Emilia exhausts her capital around age 79. “All he has left is government pensions to pay all his expenses.

“I redid the calculations with the same assumptions, but a cost of living of $50,000 per year,” continues Charles Rioux-Rousseau. In this case, she would have money until age 97. »

What happens if Emilia opts for a cost of living of $55,000 per year? She then reached 90, the age she had targeted.

In all three scenarios, Emilia retains her property.

How to finance your other projects? The purchase of a car and the orthodontic costs for your two granddaughters?

Emilia is not ready to sell her house, she says. However, she plans to live with her partner in four years, which would save her $12,000 per year, according to her calculations.

By selling her property, she would collect at least $300,000, the planner estimates. It would then have the liquidity for these two projects.

“I redid the calculations including the sale of the property, the gain of $300,000 and the expected annual cost of living of $65,000,” explains the planner, “and I was surprised by the result. She would have income until age 97. »

This fourth scenario works for Emilia.

Eventually, she may be able to share taxable income with her common-law partner on her tax return. Withdrawals from your registered retirement income fund (RRIF) could be split.

For the moment, Charles Rioux-Rousseau advises him to withdraw from January 2025 his life income fund (FRV) of $1,850, which is locked in. The rules have been changed, he explains, and a retiree can withdraw funds from a LIF and a LIRA from age 55.

Finally, Emilia must check whether the wills of her loved ones are in order so that everything is ready for the inheritance.

*Although the case highlighted in this section is real, the first names used are fictitious.