Another retirement question

[Jinster81]

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Hello all. I just have some questions (again) about retirement.

Like all of you, I love my parents. I care for my mother and father. But being the only child and having some financial issues, I really have limited means of supporting them. My mother is 61, and my father is 62.

My question is:

When my parents reach 65, would the retirement system cover at least their residence?

My parents came to Canada in 1988, and were citizens in 2008. And they worked all their lives.

Can some of you shed some light? Please?

Thank you so much in advance!! Ride safe folks!!

 

[STARSHIP]

This is quite a difficult question to answer unless we know their currrent net worth and their retirement investments, and their health and ability to work to their retirement. You may want to consult a Financial Planner.

Your parents as still very young and your financial position would most likely improve significantly over the next 10 to 15 years, the bigger issue is when they get into their eighties and will require more assistance from you other than financial.

It is something we all go through, but parents are proud individuals and like to be independant so they will do OK. If their home is paid-off, the basic pensions would allow a basic lifestyle.

 

[invictus43]

65 means you get only your government old-age pension and possibly the guaranteed income supplement. This is simply a cash payment not linked to residence costs or anything else. I believe the can get up to $24k or something like that. If they have no other pension income or RRSP/investment income, that's all they get. If they require long-term care, they can apply to get admittance into a provincially funded long-term care facility but they are required to show they need to be there. Retirement homes cost money, big money. Best case, they own their house and can sell it and downsize to something more affordable. The money realized from the sale of the house can supplement their income from old-age pension. Retirement homes cost from around $2k a month to $7k a month depending on the level of care they require. Obviously, it's best if they can move in with relatives who can take care of them. Seniors are also entitled to a bunch of little expense coverages so those help as well.

There are some things regarding money and probate that you should also investigate. For instance, it would be a good idea to put yourself on their bank accounts and make them joint accounts. This will give you access to the money immediately and you won't have to worry about the probate process.

I'm really not an expert in this but I'm sort of in the same boat and am trying to figure these things out myself. Fortunately, my parents have a good pension and equity. I think they make more than I do!!

Best of luck.

 

[l84toff]

Another thing to consider is if they have any pension benefits from their home country. My dad has just run in to this himself. If they do and Canada has an agreement with that country then they have to also apply for their pension back home. My dad is currently only getting a portion here and is awaiting a response from the old country about his pension, which will dbl his current amount. He worked something like 21 years back home.

Not really sure about having to get joint bank accounts but you might want to discuss having power of attorney with them. It should make any banking issues a non-issue. Something for you too look into anyway.

Their CPP and old age benefits will not add up to much however. I can't recall the exact $ at the moment but will ask my wife and get back to you if you want. Her mom has been retired for some time already.

 

[nobbie48]

I'm one of the older forum members and in the same age bracket as your parents. I don't want to be a burden to my offspring so look at the pension issues seriously.

I'm Canadian born and have been contributing to CPP forever at different input levels. Also I tend to be pessimistic with government budgets so I don't see them preparing a bed of roses or me and the Mrs.

I own a modest size home and have no debts so I figure the CPP and OA security will barely keep the roof over my head but not feed me very well and definately not pay for toys or travel. That's why I have RRSPs.

Re "...would the retirement system cover at least their residence?..." you would have to define residence and detail retirement system.

Is the residence a rental, condo, small bungalow or 10,000 SF castle?

CPP is payback for the $$ contributed. Someone who maxed their contributions will get the maximum back. A minimum wage earner won't do as well. OAS I think is a fixed amount but subject to claw-back if you make too much. At 65 a lot of tax and social benefits kick in.

Do your parents have any other pension income from company pensions etc?

My financial Guru goes through pages of Q&A to give me answers because of the variables.

They can find out what their CPP payouts are going to be by calling the Govt.

This really needs a sit down talk with a guru but be carefull of the worry wart ones. They want to control finances even when it isn't needed and create unrealistic scenarios. ie you can't retire with less than a million in the bank. There was a book on retirement planning with a title that included "Smoke and Mirrors". It outlined some of the common worries.

Where do they want to live? In their present digs or looking for a change?

Do they feel obligated to leave you a fat inheritance / something for the grandchildren?

They will not starve or have to live under a bridge but will they be happy depends on what they have outside the CPP / OAS and what they want to do once they retire.

Finally, people don't tend to change. If they were frugal they won't likely become spend-thrifts and if they were free and easy with the bucks they won't be happy on a tight budget.

 

[Thom]

nobbie48 pretty well says it all. The key is that most people want life after retirement to be pretty much the same as life before retirement. That is why it is important to have zero debt, preferably WELL before retirement. Hopefully your folks have decent pensions or a self funded plan via RRSPs etc. I am 64, retired at 52 with a pension, and started collecting my CPP at age 60. It paid for the lease on my $40K daily driver for the last four years which was a nice bonus. I don't need $500K a year in my retirement, but I do not want to live on $24K a year either. It all boils down to 1) what you want to do in your retirement, 2) what your financial obligations will be, and 3) what your income and savings will consist of. If all three align, you are golden.

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