If you’ve started looking at assisted living or memory care options for your parents, you’ve probably come to realize the rates charged by retirement communities vary widely. For that reason, it’s important to have a firm understanding of what your parents can afford.
To determine this, it’s wise to talk with a financial advisor.
Here are some of the assets and income streams that might help cover your parents’ monthly living expenses while they’re living in a retirement community:
1. Company pensions – Possibly from several sources if your parents worked for more than one employer in their careers. May include foreign pensions if they worked outside Canada at some point.
2. Government benefits – Including Canada Pension Plan and Old Age Security payments. May include a spousal allowance, disability tax credit, or veteran’s benefits.
3. Personal savings and investments – Including Registered Retirement Savings Plan and Tax-Free Savings Accounts. May include income from a rental property or sale of assets.
4. Home equity – If your parents currently own their own home, proceeds from its sale can help to cover future living expenses. Consult a financial professional to understand tax implications.
5. Insurance - May include long-term care insurance. Check the insurance policy to see what expenses are eligible. Your parents may also be able to draw on assets in a life insurance policy. Again, seek professional advice on how this might be done.
6. Loans – Including a reverse mortgage. However, to qualify for a reverse mortgage, one of your parents or a co-borrower would need to continue living in the house. Other loan conditions may apply.
7. Friends and family – Members of your family may choose to help your parents cover part of their living expenses. But they should consider whether this is something they can sustain over the long term.
Ask individual retirement homes to itemize what your parents will need to pay. What’s included and what’s not?
For instance, one retirement home may have what appears to be a relatively low monthly fee, but a number of services your parents need must be paid for on an à la carte basis. In the end, the bottom line may be the same as or higher than at other homes.
Consider not only what services your parents need now, but what they may need in the future.
For example, if they end up needing more personal care in the future, can that be provided, and if so, at what additional cost?
Understanding the numbers – both on the income and expense side – will prevent your parent from moving into a retirement home they can’t afford in the long run, or a home that can’t provide additional care they might need in the future within their budget.
But be warned: gathering all this information can take hours upon hours of your time. Most retirement homes don’t post their monthly fees, meaning that you’ll need to contact them directly. And most likely they’ll want to have a conversation with you first, rather than just supplying you with the numbers.
Multiply that by however many retirement homes you’re checking into, and it’s not hard to see how labor-intensive it can become.
That’s why we do all this research for families.
At Tea & Toast, we already know what retirement homes in the Ottawa area charge, what sorts of services they offer, and what you need to pay extra for.
On average, we save each family we meet with in excess of 80 hours. Not only that, we can provide the results either for FREE or a modest fee, depending upon how wide you want us to take your search.
No more wasting your time investigating retirement homes that turn out not to be a good fit for your parents. We’ll help you develop a shortlist in just a fraction of the time it would take you to do it yourself.
All you have to do is give us a call to get the process rolling.
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