The financial impact of caregiving

With 49% of Canadian caregivers facing financial challenges, it's no wonder saving for retirement can feel impossible. If you find yourself becoming the primary caregiver for a family member, here are some tips to help keep your retirement savings on track.

In Canada, more than 8 million people provide unpaid care for someone with a disability, medical condition or age-related need, and 59% of them also have jobs. Caregiving can be expensive in many ways. It can cost money up front, for example, when paying for medical bills and equipment, but it can also cost you if you have to stop working for a while to look after someone.

Caregiving expenses can make saving for retirement difficult. Here are some financial implications of caregiving and how they can negatively impact your personal savings.

• Reduced income: You may work fewer hours, leave your job or retire early, which can reduce the amount of money available to save for retirement.
• Decreased retirement contributions: Working less equals less money going into your RRSP, TFSA, or workplace pension plan.
• Withdrawing savings: Taking money from retirement accounts to cover expenses can reduce your savings, and you may potentially pay more in taxes.
• Missing employer matching contributions: Leaving jobs or cutting hours can mean losing out on employer matching contributions to your group RRSP or pension plan.
• Lower CPP, QPP, and OAS benefits: A prolonged reduction in earnings or gaps in employment can lead to permanently lower Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) retirement benefits, as well as affecting your eligibility for other income support.

While it can be difficult to manage priorities when taking care of a loved one, here are some tips to help balance your responsibilities while also saving for retirement.

• Work with a financial advisor: A financial expert can help you create a plan to manage caregiving costs, prioritize paying off debt and saving, and help keep your retirement goals on track.
• Use educational tools and resources: Your workplace retirement plan website likely has financial education and wellness resources. Explore calculators, budgeting tools, and caregiver-focused articles or webinars to help build confidence in managing both caregiving and your finances.
• Leverage your workplace benefits: Check if your employer offers flexible schedules, remote work options, emergency backup care, employee assistance programs (EAP), or caregiver support groups and consider using them.
• Build an emergency savings buffer: Open and fund a dedicated emergency savings account to handle unexpected caregiving expenses without derailing long-term savings.

The costs of caregiving are high, but they don't have to derail your future. By creating a deliberate plan, leveraging your workplace benefits, and building a financial safety net, you can protect your own retirement while caring for a loved one. Take the first step. Your financial well-being may depend on it.