What would you do if your parents were broke or in debt and unable to work? Would you take care of them? Would you pay off their debts?
Fortunately this isn’t an issue for me since my dad may be 90 years old but makes every frugal person or blogger I know look like complete wastrel spendthrifts.
Should you take care of aging parents?
I ran across an article where a guy my age was being sued for filial support of $250 / month by his estranged 71 year old mother who was in credit card debt to the tune of $28,000.
Here’s the full article: Payback time for parents.
This is a bit of a strange situation or “family” since his parents basically ran out on him when he was a teenager, but the laws are still out there to allow this to happen (in all Canadian provinces but Alberta). Personally, I found the idea of this guy having to pay for a parent he had seen 10 times in the last 30 years quite offensive, but maybe there’s more to the story than it seems.
In general, I think most people should take care of their parents, but what if you can’t have them live with you because you don’t have the space? What do you do if they have Alzheimers and need near-constant care but you need to go to work to pay the bills? A nursing home may be the only option in that case. And I’ve read of several cases in the US where kids have been sued by nursing homes to pay their parent’s bills.
Options for seniors?
What do you do if you have the space and the time but they kind of drive you crazy and you don’t want to live with them? That’s the situation with my ex’s mother. Since her husband died, she’s lived in an independent living setup of a 2 bedroom apartment with meals provided and regular nursing visits. It costs over $2,400 per month. Old age security covers about half of the bill and the remainder comes from a combination of the kids and her savings from selling the family home. She spends 95% of her waking hours watching TV alone with no human contact. Fortunately she has an extremely obese little dog to keep her company that never gets taken for walks. This is a lady who gambled away over a quarter of a million bucks in VLT addiction in her late 60’s.
Should the kids be having to pay because she blew through savings? (And is that abusive to the dog?)
According to this site, the average cost for one person in a retirement home is about $2,100 per month. Fortunately, there are rent controls and subsidy options for low income seniors, but it may mean that they have to move away from family or their community.
How much does the average senior make?
The average senior in Canada pulls in $7,100 per year from Old Age Security, $6,200 from the Canada Pension Plan, $15,000 from RRSP’s and pensions – and employment income of $12,500 according to this site. Only 59% of Canadians have income from investments and 67% have income from RRSP’s and pensions. That’s an average of about $40k/year – but for every senior like my dad who gets no OAS or CPP (clawed back) and still makes a very large income from investments and annuities, there’s probably 2 or 3 people that make very little non-government money.
And is it fair that someone who worked incredibly hard, lived extremely below their means and saved like my dad should receive NOTHING from the system that he paid into for 50 or 60 years? Isn’t that a disincentive for saving?
How much will you make as a senior?
Finally, for Canadians, here’s a retirement income calculator to determine CPP, OAS, pension or RRSP’s and other income: Retirement income calculator.
The calculator results came in at $37,000* in today’s dollars after age 65 for me, so it looks like I’m more than covered even if there’s either no CPP or OAS, it’s reduced, there’s hyper-inflation or the markets tank. Hmm, maybe that means I should spend more now. Or save it so I can live in a super cool retirement home down the road. I hear there’s some that have in-house wine making rooms…
* This considers pension accounts only and that CPP & OAS is either negligible or won’t exist (although I don’t believe that will be the case) – everything else is getting spent before I hit 65.