Nearly 3 in 4 Canadian caregivers would sacrifice their financial security for a loved one. How to protect your retirement

Helping a parent and protecting your retirement can become competing priorities. Before you take on more than you can afford, it helps to understand the full cost and what support might be available.

How caregiving can reach beyond your monthly budget

The survey found that caregivers spend an average of $7,025 annually in unreimbursed personal funds supporting older loved ones. Meanwhile, 71% entered the role with little or no planning.

Financial caregiving isn’t just contributing money. It can also mean managing financial affairs and helping with estate matters.

For someone helping an aging parent, some immediate expenses might include groceries, transportation or paid care. A bigger cost could be income lost by cutting back at work. You might be able to cover the extra costs for a month or two, but if your parent needs help for an extended period, what would that mean for your own finances?

Work out what you can afford before you commit

If you’re unsure how much you’ll need to contribute, start by comparing your parent’s monthly expenses with what their own income and savings can cover, so you know the gap.

From there, take a look at your own budget. After paying your bills, making any debt payments and putting money toward emergencies and retirement, how much can you afford to help with?

Even a few hundred dollars a month can add up. For example, if you contribute $500 a month, that’s $6,000 a year. And if you stop putting that money toward retirement, you’ll also miss out on any investment growth it could have earned.

Consider talking to siblings or other relatives about how they can help, too. One might be able to cover part of the cost, while another could drive your parent to appointments or help at home. Be clear about who’s doing what, keep track of expenses and check in regularly to make sure the arrangement is still working for everyone.

Check benefits and tax relief before drawing on savings

If caregiving requires time away from work, check whether you qualify for Employment Insurance benefits.

The family caregiver benefit for adults provides up to 15 weeks of support to eligible people caring for a critically ill or injured person 18 or older. Compassionate care benefits provide up to 26 weeks for someone supporting a person who needs end-of-life care. Keep in mind that these benefits aren’t designed for routine assistance for an aging parent.

To qualify, you’ll need medical certification and must meet work-related requirements. For insured employees, these generally include at least 600 insured hours and a reduction in regular weekly earnings of more than 40% for at least one week.

You may also qualify for the Canada caregiver credit if your parent depends on you for support because of a mental or physical infirmity. Eligibility and the claim amount will depend on your circumstances, including your parent’s net income. It’s a non-refundable credit, meaning it can reduce income tax owing, but isn’t a standalone benefit payment.