REPORT ON RRSPs: FAMILY NEEDS AND RETIREMENT PLANNING
Squeezed in a generational sandwich
MARJO JOHNE
Special to The Globe and Mail
January 30, 2008

Each month, after covering her share of the household bills and mortgage payment, Lucy Ye takes the bulk of the money left in her bank account and uses it to cover two additional obligations: a registered education savings plan for her eight-year-old-son and a $1,000-a-month commitment to help pay her parents’ mortgage and other living expenses.

“I know I should also be putting some money away into an RRSP,” says Ms. Ye, a 37-year-old dental supply sales representative who lives in Toronto with her husband and son. “But after paying the RESP and giving money to my parents, there’s really nothing left for my own retirement savings.”

Ms. Ye is part of the growing group of Canadians known as the “sandwich generation” – those who are caught between raising children and caring for aging parents.

Not surprisingly, a significant portion of baby boomers belong in the sandwich generation. A 2004 study by Statistics Canada found that close to 30 per cent of Canadians aged 45 to 64 were helping aging relatives while still supporting their own children.

The Statscan study also found that 40 per cent of sandwiched Canadians incurred extra expenses such as renting medical equipment, 15 per cent had to reduce their working hours, and 10 per cent lost income.

“It’s a tough position to be in,” says Bev Moir, a Toronto-based senior investment executive with Scotia McLeod, the investment arm of the Bank of Nova Scotia and a division of Scotia Capital Inc.

“And it’s something that often happens unexpectedly, so many people are just not prepared mentally, emotionally and financially.”

While the added responsibility of looking after a parent may suddenly restrict the household budget, it doesn’t necessarily mean RRSP contributions have to be put on hold, say the financial planning experts.

In many cases, they say, sandwiched Canadians can find the money to put toward an RRSP by reducing expenses or somehow increasing the money coming in, even by just a modest amount.

As a starting point, Ms. Moir suggests getting in touch with local community agencies to find out about any support programs for older people.

“For example, if your parent needs care during the day while you’re at work, there may be a community program that can help you with that,” she says.

Ms. Moir also recommends checking your employer’s benefits plan to see if it includes an employee assistance program – a service, provided by a third party, to help employees through personal difficulties such as divorce, drug or alcohol addictions, or a death in the family.

“Your [employee assistance program] provider may be able to direct you to resources that can help you care for your parents more cost-effectively,” says Ms. Moir. “Even if you only save $50 a month, there’s your RRSP contribution right there.”

Once you’ve begun to make regular RRSP contributions, Ms. Moir suggests that you can then ask Canada Revenue Agency to decrease the tax taken off your paycheque (CRA will calculate the reduction based on your income bracket and how much you’ve committed to pay toward your RRSP each month). This would add more dollars to your paycheque, which you could add to your retirement savings.

Ken MacCoy, a financial planner and life insurance consultant in Chilliwack, B.C., points out that sandwiched Canadians whose parents or elderly relatives live with them also may be able to claim a caregiver credit on their income tax return.

For the 2007 tax year, the maximum caregiver credit is $4,019 for each parent or dependant relative. To qualify as a dependent, the parent or relative must meet a set of criteria based on their age (they must be 65 years or older), relationship to the person filing the tax return, and income.

Another way to find money to invest into RRSP is to lower monthly mortgage payments, says Mr. MacCoy. “You can look at either a longer mortgage period to generate additional cash flow, or you can get yourself a line-of-credit mortgage.”

The latter is a better choice, he says, because it’s based on simple interest instead of compounding interest – saving you thousands in the long run – and also because it allows mortgage-holders to pay only the interest on the loan.

“So you can use the extra money to save in an RRSP while you’re also paying for your parents’ care,” he says. However, this means you’re not reducing the principal amount of your mortgage, so he says it’s a good idea sit down with your parents and talk to them about getting a life insurance policy and designating you as a beneficiary. Then, when they die, you can use the insurance benefits to pay down your mortgage.

Dependent children may also be able to lend a hand, says Mr. MacCoy. Many university-age children prefer to live with their parents because it’s cheaper than renting their own place. But if they have a part-time job, it may not be a bad idea to ask them to pay rent while at home, says Mr. MacCoy; the parent could then put that money toward an RRSP.

So what about people like Ms. Ye, who choose to leave their nest egg bare while they save money for their children’s education? Wouldn’t it make more sense for them to put their retirement savings before junior’s college fund?

Ms. Moir doesn’t think so. “Why not do both: maximize your RRSP and get a tax refund, and then put your refund into the RESP?”

Ted Rechtshaffen, president and chief executive officer of TriDelta Financial Partners Inc., in Toronto, says part of a good RRSP strategy is knowing when not to put money into an RRSP. Some sandwiched Canadians end up taking a pay cut while looking after their parents. Because tax refunds on RRSP contributions increase as income goes up, it may make more sense to defer contributing to a plan until your paycheque is bigger.

Ms. Ye, meanwhile, hopes she won’t have to wait too long to start an RRSP.

“I’m getting a little worried,” she says. “Even though I’m still young, I know that if I don’t look after my RRSP now, I may be in trouble in the future.”

***

Sandwich ingredients

30%
Number of Canadians age 45 to 64 who are helping aging relatives while supporting their own children

$4,019
Maximum caregiver tax credit for each parent or dependant relative for the 2007 tax year

Being offered a seat on the bus is a perk that comes with age. It’s also a pain.
ALICE LUKACS, Freelance, Published: Monday, June 04, 2007, © The Gazette (Montreal) 2007

Years ago, my diplomatic boss addressed a co-worker at a meeting as “the young lady.” I was smiling to myself, as this woman must have been close to, or over, 50 – quite “old” to my thirtysomething mind. Some “young lady”!

Forty-odd years later, I thought of this incident when, as I stood in line at the supermarket check-out, a man brushed past me, exclaiming, “Excuse me, young lady!” I took it as a certain sign that I was getting, well, on in years.

There are other reminders. I hate boarding a bus or the metro. I am happy when I can find an empty seat on my own, but that rarely happens. As soon as I step on a crowded bus, someone jumps up and offers me their seat. It seems there is a certain discrepancy between what I see in the mirror at home and what others see. I feel there is an invisible “Senior” tag hanging around my neck.

It used to be that I was an anonymous passenger. Now I feel as though my privacy is invaded and I am being categorized. Of course, the only thing worse is to clamber onto a crowded bus and find that I have to stand all the way.

My fellow-senior friends have rebuked me for my attitude, saying I should be grateful when someone offers me a seat. I have taken their advice and, though still upset, display a charming smile and utter a grateful “thank you” on every occasion.

The funniest incident in this “musical chairs” routine happened one day when, as I was boarding the bus, a grey-haired woman, whom I judged to be not much younger than I, offered me her seat. How depressing, I thought – but then someone else jumped up to offer her a seat.

Maybe we seniors should carry our birth certificates with us, I thought, so that we could compare seniorities to determine who should have priority when it comes to a seat on the bus.

But sometimes even documents can trigger remarks about seniority, as I found out on a recent visit to the passport office.

At the door, I was asked to hand over my Canadian citizenship certificate to the officer on duty.

As an immigrant, I never thought my citizenship card held any data of special interest. The immigration officer, however, thought otherwise. “1958!” he exclaimed, looking at my card. “You became a Canadian citizen in 1958? That was a long time ago!”

He made it sound as if I was of pre-Confederation vintage. Even the passport office is not safe anymore.

Like all seniors, I enjoy the perks, the discounts that come from being a Golden Ager. But, please, do I have to be identified at a glance as entitled to a senior discount by the cashier at the pharmacy, at the movie theatre, or the bus depot? I beg you, dear cashier, look at me and don’t put me right away in the senior group! Let me pronounce the “S” word! Make my day!

I must say I also enjoy the senior privilege of “pre-boarding” at the railway station. Although I carried “pre-boarding”a bit too far at the bus terminus when I suggested to a surprised senior friend that we go to the head of the long line waiting for the bus. Sadly, or happily, we got away with it, too!

Now, as a self-respecting senior, I face the day mentally braced against the well-meaning younger generation. I have one request: Please, just once, don’t remind me that I am getting older. Let me enjoy the illusion that I appear on the outside just as I feel on the inside – young, like everybody else!

www.bevmoir.com and ScotiaMcLeod are not responsible for external websites linked to from www.bevmoir.com or any articles posted on this site from those not part of the Scotiabank Group.

I thought this article by Linda Stuart in Women’s Health Matters published by Women’s College Hospital may be of interest to visitors to my site.

You’re not alone, there are resources to help — and it’s vital to take care of yourself, too. These were some of the words of wisdom offered to caregivers looking after older family members, during a session on eldercare at the 2007 Women’s Health Matters Forum & Expo in Toronto.

‘Many of us find ourselves having several responsibilities — looking after our children, looking after ourselves and looking after our parents. Those of us in this group are called the sandwich generation,’ said Audrey Miller, managing director of Elder Caring Inc., a professional eldercare management and consulting company based in Toronto.

As a geriatric care manager, Miller said she is often the first point of contact for families seeking help to care for an aging parent.

‘There are many resources out there, and sometimes we need some assistance in making good and informed choices,’ she said.

Joanne Bunton, community outreach coordinator for Dignity Memorial Community Programs in Thornhill, Ont., said there are certain eventualities in life for which many people do not make the necessary preparations.

Families will be better equipped for situations that may lie ahead if they gather information now about various illnesses associated with aging, such as heart disease or Alzheimer’s, she said.

‘If you can gather information bit by bit now…then when the eventuality does come into your life, you’re going to be prepared to deal with it,’ Bunton said. ‘And know that you need not go through any situation alone.’

Where to turn for help
Miller said a local Community Care Access Centre (CCAC) should be the first stop for any family seeking help with providing care to an older relative. CCACs are publicly funded agencies located across Ontario that help older adults to access government-funded, in-home health-care services and long-term care facilities.

For seniors wanting to maintain their independence by continuing to live at home, there are many basic resources available, such as Meals on Wheels, transportation services, respite care programs and senior day programs. In addition, personal support workers arranged through a local CCAC can help older individuals with personal care needs.

However, often families choose to supplement publicly available care services through private options, which can become costly, Miller said.

When considering long-term care facility options, families should again contact their local CCAC, which coordinates the application process for placement in long-term care facilities. One thing to keep in mind is a decision must be made within 24 hours, once a family is notified that a long-term care bed is available for their older relative, Miller said.

When is it time?
One challenge for families with aging relatives is determining when it is time to start looking at in-home health-care services or long-term care housing options. There can be many telltale signs in an older person’s home that indicate personal care assistance is required, Miller said.

Some of these signs include:

• the older person is not wearing clean clothes or they have body odour;
• there is unopened mail, unpaid bills or other signs of disorganization;
• there are blackened pots in the kitchen, dirty dishes piling up or a lack of fresh food in the fridge;
• the trash has not been taken out;
• the older person has unexplained bruises; and
• there are dents in their car, if the older person is still driving.

Oftentimes, an unexpected event will accelerate the need to address an older relative’s declining health. That was the case for Vicky Riley Keyes, founder of Red Coats Moving Solutions Inc., a Toronto-based moving services company designed especially for seniors.

Some time ago, Riley Keyes’s mother fell down her basement stairs and broke her hip. After hip replacement surgery, her mother needed somewhere to convalesce. Fortunately, Riley Keyes said, she was able to have her mother stay with her, and more luckily, her mother’s younger sister came over every day to look after her, so Vicky and her family could continue to go to work.

‘But what would happen if you were not able to have your mom come home to your house? Or if you lived out of town and couldn’t possibly go over there to look after her, while she was recovering from this hip replacement? How would you manage?’ Riley Keyes asked.

One option for an older person in that situation would be supportive housing, Riley Keyes said. A senior recovering from a hip replacement could go into a long-term care facility to recuperate or a private retirement residence to convalesce until he or she was ready to go home.

In-home safety considerations
Families with older relatives living at home should consider ways to minimize the risks of day-to-day activity in the home. A local CCAC agency can provide a booklet on safety-proofing the home, Riley Keyes said.

Some of her suggestions include:

• installing grab bars in the bathroom;
• using non-skid rugs or taking up the rugs altogether; and
• ensuring telephone lines are properly secured and not running across the floor.

Supervision during bathing is also very important, she said. ‘Know the risks and take the steps to minimize them,’ Riley Keyes said.

‘Talk to the CCAC, the public health department, and your doctor. And find out what there is in your neighbourhood and what resources there are to minimize the risk in your parent’s home.’

Riley Keyes said one option is a personal emergency response system, such as Lifeline Systems Canada Inc.’s Personal Help Button, which can be worn around the neck or on the wrist. The wearer simply needs to press the button to call for help. The call is then relayed to a response centre via a two-way communicator system in the home, and help is summonsed immediately.

‘It’s important to listen to what your family member’s wishes are regarding care,’ said Jane Teasdale, who is responsible for business development at Premier Homecare Services Inc., a Toronto-based private homecare company.

‘Many older adults would prefer to stay in their own home and surroundings, and have a little bit of support with tasks that are getting difficult,’ Teasdale said, adding that private homecare services can provide top-up assistance for seniors who are already receiving some personal care from limited publicly funded services.

‘You also need to be aware of when a parent is no longer capable of living in their own home,’ Teasdale said.

Other housing options
Housing options other than long-term care facilities include adult lifestyle communities, retirement residences and seniors’ apartments, many of which now offer support services such as 24-hour nursing care, common dining facilities, activity areas and wellness centres.

A fairly new option for Ontario residents is life-lease housing, said Riley Keyes.

‘Under a life-lease plan, residents purchase a life-lease interest at market value in the property and their suite, similar to purchasing a home or a condominium. They have exclusive use of the suite and shared use of all of the common areas and facilities, and many more benefits than home ownership,’ she said.

Bunton advised families to visit different retirement residences ahead of time to let their older relatives see what they liked and disliked about the various housing options. With waiting lists being as long as they are, it would be a good idea to get the family’s name on the list, once a suitable retirement residence is identified.

Help for the caregivers
Miller and Bunton both recommended that families have a meeting to discuss the various aspects of caring for aging relatives.

‘If you’re already in a care scenario, sit down with your siblings and find out what everybody can do to help,’ Miller said.

‘Sometimes you need a little professional help to mediate, because we all have sibling rivalry and all of that baggage continues to grow older with us. It’s important to speak out for yourself.’

Family members with the greatest caregiving responsibilities should consider joining a support group, Bunton said.

‘It’s great to commiserate with someone else who is experiencing just exactly what you’re experiencing. There’s going to be an empathy level there that you won’t find in any other place,’ she said.

Bunton said that equipping yourself with knowledge ahead of time is empowering. And, most importantly, caregivers need to keep the balance between their various responsibilities.

‘It’s crucial for us, as we find ourselves pulled in different directions. If you’re not looking after yourself, you can’t look after anyone else,’ Bunton said.

To locate a local CCAC, visit the Ontario Association of Community Care Access Centres website.

Editor’s Note:
Written by Linda Stuart, a Toronto-based freelance writer who specializes in health and technology issues. Coverage of a session at the 2007 Women’s Health Matters Forum & Expo.

Related Resources:
More coverage of the 2007 Women’s Health Matters Forum & Expo can be found here.

www.bevmoir.com and ScotiaMcLeod are not responsible for external websites linked to from www.bevmoir.com or any articles posted on this site from those not part of the Scotiabank Group.