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Episode 18: Financial Decision Making for Caregivers

Caregivers Out Loud

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At some point in our lives, we’ll all be faced with a tough decision we didn’t see coming. In most caregiving situations, people enter the caregiving role with love and passion. Then pretty soon, they begin to see some of the bigger implications, such as how finances are a big factor in the choices that affect the care recipient OR the caregiver themself. In today’s episode, we tackle some of the anxiety and emotional stress for caregivers that come with making important financial decisions and answer the question, how do we make good decisions during difficult times?

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Quotes

  • “Also just doing a lot of the extra stuff for caregiving, driving people to appointments, missing out on work as well. That’s a big one. If you can’t work, you have to take a backseat. So your income is disrupted to give the time to caregive. So like, what does that look like and how long is that sustainable?” 
  • “People talk about money all the time, but they never talk about money. It’s like everyone talks about it. People say things like, oh, it’s so expensive, or like, oh, we’re spending more than we needed to. Or like, oh, my God, this is killing me financially. So that’s all fair game at the, you know, dinner table or even to a neighbour, but no one’s going to say something like, well, I have $8,000 sitting on a credit card, and I can’t pay it off because I’m spending $500 a month, helping support, you know, my mom. And I just continue to go into debt and I don’t know, I might have to take out another mortgage. Like, no one’s talking that specifically about it.”
  • “I think caregiving is one of those things where finding, I call it a circle of care, finding other people who are in the same situation as you is extraordinarily important for your finances. Which sounds funny, but it helps you not makes rash decisions because you are speaking, you’re talking about them with someone else who’s going through it at the same time or has maybe just gone through it. And they can help you navigate it and point you to resources that you may not have even known in the first place. I think not going through it alone is also really helpful in reducing panic and overwhelm, which often leads to irrational decisions.”

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Transcript

[MUSIC IN // INTRO]

VOICE-OVER: You’re listening to “Caregivers Out Loud”, powered by Family Caregivers of British Columbia and hosted by Bill Israel.

[MUSIC DEVELOPS]

BILL: At some point in our life, yours and mine included, we’ll all be faced with a tough decision we didn’t see coming. In most caregiving situations, people enter the caregiving role with love and compassion. Then pretty soon, they begin to see some of the bigger implications, such as how finances are a significant factor in the choices that affect the care recipient OR the caregiver themself.

In today’s episode, we tackle some of the anxiety and emotional stress for caregivers that come with making important financial decisions and answer the question, how do we make good decisions during difficult times? 

[MUSIC FADES]

SHANNON: If we all could go back in time to before it was even a situation and plan around it at that point, that would be ideal. But no one has a DeLorean, so that’s not possible.

BILL: That’s Shannon Lee Simmons, a Certified Financial Planner and the author of a new book “No Regret Decisions: Making Good Choices During Difficult Times”, talking about when is a good time to start thinking about financial planning around caregiving.

SHANNON: What I really mean to say is as soon as possible, and the reason I say that is that, oftentimes there isn’t even anything necessarily that can be done to change a situation. But when you see a situation coming versus being surprised by it, it takes the shock away. So something that’s hard but expected feels different than hard and shocking. I think the thing about caregiving when it comes to finances that’s so fraught is that the emotional stakes are very high most of the time, and there’s just a ton of uncertainty in how long something might play out for.

So that’s why I think that if you get thrown into a caregiving situation, even though it might be terrifying to do, because the money part really scares people. As soon as you’re on the roller coaster, I think that getting some financial support to map out what it might and could look like along the way is helpful to mimic a sense of control. And also so that you take that element of surprise out of, some bad financial things that might happen.

BILL: Yeah, absolutely. Are there any common themes you see with family caregivers that either cause the financial distress or the emotional distress or maybe both?

SHANNON: Yeah, you know we’re talking about the situations where it’s not necessarily going the way that everybody wished that it would go. I’m very hopeful, I feel like there is a positive solution in every conundrum. But a lot of that requires really intense conversations that are hard and thinking about things like in a way of sharing the load in a way that makes sense for everybody without resentment. So I feel like resentment is the thing that everybody’s trying to avoid in caregiving. I would say that’s another common theme is like, nobody wants to feel that way. Nobody, and nobody wants to feel like a burden, nobody wants to feel resentment. 

So I think that’s a common theme as well is like, the anxiety over feeling resentment, the anxiety over feeling like a burden, depending on who you’re talking to. And then the conundrum around sharing the burden if there are other people and how does that happen within it as well? And I think mental health, right? I mean, that’s why this podcast is so great too. I think it’s really hard to be a caregiver. [LAUGHTER] It’s really hard. And I think knowing that it’s just hard and that acknowledgment in itself is really helpful.

BILL: Sure. And that burden thing you were talking about often gets one uped by the care recipient who often will say, I don’t want to be a burden. And so now they want to be in the conversation about don’t be spending this money, don’t do this, don’t do that.

SHANNON: I know it’s a roller coaster, it really is.

BILL: It is. Is there anything like a caregiver finance trajectory? I’m sure there’s no commonality here, but are there certain things that any caregiver should be anticipating?

SHANNON: I do, I think that there is a shared bond. This is why, to your earlier question, I think kind of navigating or plotting out the potential financial piece as to the best you can project from as early as possible is important, because you can really get a feel for where those common financial things of being a caregiver would happen. So, for example, are you able to support in any way financially? Because you may want to, but let’s have a look at what that would impact in your overall finances, right? And like how does that play into everything for better or worse, right? Is it totally fine? Is it going to land you in debt, having to sell your house? Like, where are you along that journey? 

And so I call those things pivot points in finances, things that people often will spend money on, that I see in any ways, anecdotally is like, helping to cover the cost of long term care because the person they’re caregiving for doesn’t necessarily have enough assets to get in a place that’s close by or where they want to. Also just doing a lot of the extra stuff for caregiving, driving people to appointments, missing out on work as well. That’s a big one. If you can’t work, you have to take a backseat. So your income is disrupted to give the time to caregive. So like, what does that look like and how long is that sustainable? 

So what’s common and financially, what you can plan on in periods of financial strain? Whether it’s your income is disrupted or your expenses go up. And then what a plan can help you with is maybe it’s not even a plan. Maybe it’s just a projection, which are different things. But it’s really plotting out at what point is a red flag, right? When does it become not okay anymore? When is it dangerous for your own person to do that? The term I always say is like lighting yourself financially on fire to keep someone else warm. A lot of people are willing to do that, or they think they are. 

But how far down the line can you go and mapping that out ahead of time? And the other thing is like, that I usually use is a term, called guardrails. Which are different than pivot points, because pivot points are just, hey, something in your life has to change here if you do this and it’s like, okay, well, that’s a choice. I have control. And a guardrail is more like, okay, well, we can’t go any further. Like, If you map that out from the get go, then you see it coming a mile away, and so it doesn’t feel scary. And you know when to pump the brakes and how much is sustainable.

BILL: Yeah. Because ironically, as pivot points approach, they’re not only financial, they’re extremely emotional. And it just gets more and more difficult to make the decision.

SHANNON: Yeah, both of it is really important too, because I remember talking to somebody who’s receiving care about the financial piece there, too. What they want is extremely important too. So if they’re caregiving because they’re sick and they’re able to make the decisions and they don’t want to see certain things happen. I think that there can be a lot of conflict there as well between the person who wants to be the caregiver or how they would do that and then the person who’s actually receiving it as well. So I feel like that conversation needs to happen across both levels. And I would say mapping out, like, with someone who has just recently maybe received a diagnosis or something like that and needs caregiving and has the capacity to make those decisions, a lot of times what I’ll be mapping out with them is, because it’s so uncertain, right. We don’t know when and how it’s going to happen. 

So let’s look at this and we do things, and we map out the money with really short I call them micro timelines almost. And it’s like, okay, so maybe we don’t know what the next three years brings, but we probably know what the next three months or three weeks looks like. So let’s focus on the financial piece there. But if you’re in a situation where you are in need of care, it’s so overwhelming to start thinking about the financial plan for a long time. And so what I’ll do sometimes is like, okay, let’s focus on the next three weeks. Like, what can we do? What can we control over the next three weeks? Don’t worry about the next three years. Let’s just focus on these really short timelines to try to make it a little bit less overwhelming. And then eventually you start talking about the bigger pieces. But if you’re the person receiving the care, I find that it’s almost a different type of panic that happens, instead of looking at the big picture, it’s almost like you do the opposite and you start financially planning around the extreme short run.

[MUSIC IN]

BILL: Money can be an intimate and private conversation, especially when it comes to family. So often the build-up to that conversation is the hard part. Yet even when it’s high stakes or tense, the relief everyone gets after the conversation was had, is all worth it.

[MUSIC FADES]

SHANNON: People talk about money all the time, but they never talk about money. It’s like everyone talks about it. People say things like, oh, it’s so expensive, or like, oh, we’re spending more than we needed to. Or like, oh, my God, this is killing me financially. So that’s all fair game at the you know dinner table or even to a neighbour, but no one’s going to say something like, well, I have $8,000 sitting on a credit card, and I can’t pay it off because I’m spending $500 a month, helping support you know, my mom. And I just continue to go into debt and I don’t know, I might have to take out another mortgage. Like, no one’s talking that specifically about it.

BILL: The old saying is, the devil is always in the details.

SHANNON: Always in the details. And I think that kind of vulnerability about your financial situation, sharing that with the person that you’re caregiving with and the person receiving care, sharing what’s happening there too. Because often something else I’ve seen, which is a very lucky position to be in, but it does help, is that you know, if the person has a disability policy or a critical illness policy, or there is something positive financially going on, it actually can help to alleviate stress. Because sometimes if your um, I’m just going to use the example of like, a parent being sick or something, and I have, um, adult children panicking and freaking out. And then once we have our meeting, it’s maybe not as bad as they thought. Right? Like, it’s not as terrifying. And they’re like, oh, okay, because I’ve heard all this scary stuff and like, I didn’t know. So sometimes even sitting down and hammering it out is relieving because it’s not as scary as you thought. 

BILL: Sure, Sure 

SHANNON: That happens too.

BILL: I think of another old saying is, better the devil you know than the one you don’t. [LAUGHTER]

SHANNON: Absolutely. It’s like a Stephen King movie. It’s not as scary as the books because seeing it is actually like, oh, that’s not scary, but when it’s all in your imagination, it’s terrifying?

BILL: Exactly.

SHANNON: It’s like that with money.

BILL: For sure. So let’s talk a little bit about some examples of the things that, uh, people can, uh, be specific about. Let’s take a, uh, common question caregivers have around using retirement savings to pay for their care recipient health care costs that I’m starting to take out of my own finances to cover this. Do you have any suggestions about those kinds of decisions where you’re balancing, uh, my caregiving needs versus my care recipient needs?

SHANNON: Yeah, I think there’s this trepidation. Sometimes people are like, if they have to take anything out of, uh, an RSP or whatever, or a TFSA, it feels scary. Even if it was $5, because it’s the psychological barrier between I’ve been saving this and now I’m using it, but I’m not retired. And I’m using it to caregive and not for retirement, I’m going to be destitute. So I think the first thing to do to answer that question is like, how much and for how long? Because so often I’ll be running numbers with people saying like, okay, if it was a one time thing of X amount of dollars like, here’s the long term impact of that. And sometimes it’s like, oh, well, I am still working for ten more years, or something like that. And this amount of money that I’m taking out, as much as it’s scary, it’s actually really in the grand scheme of my long term retirement security, it’s not going to impact things forever. So I can actually do this calmly and proudly and excitedly versus feeling terrified at 03:00. a.m. and so that’s cool. 

And then, so there’s the other piece, which is, like, okay, well, if you do this, here’s the long term impact of that, and it’s actually terrifying. Or maybe you have to downsize your house in order to make that retirement situation work for you now. And like, so what you’re actually doing is instead of just doing it, um, I don’t want to say mindlessly, but without a plan, it’s scarier because every time if you took $100 a month out of your TFSA, it can feel like retirement is screwed because you’re not sure if it is or isn’t. So at least if it is, then you know it, and you’re doing it with full knowledge. And if it isn’t, you don’t have to be as scared.

BILL: Sure. And I’m thinking of, uh, siblings, uh, in a family situation in which, uh, the primary caregiver perhaps has done a bit of that, borrowing out of their own financial security. And then the argument gets with the other siblings, hey, it’s your turn now. I’ve coughed up some money here. You need to do the same. So it’s got the potential for just increasing the stress in the family if that’s happening.

SHANNON: Absolutely. And I’ve navigated those conversations, they can be brutal. One household is making six figures and the other person is barely scraping by, there’s only so much financially that one person could do. Okay, so then it’s like, all right, well, I may not be able to contribute financially as much as the other person, but what else can I do to close that gap? And looking at it as a team effort and money just being a resource, and time is a resource, and how do we share the resources or the needed for all of this and balance it, versus it just being a thing that also leads to more resentment and guilt.

[MUSIC IN]

BILL: There’s a large portion of seniors in the province who retire with no extended health benefits from past employment. Some people might feel that the privately offered products in BC, like from Pacific Blue Cross, Manulife, and so forth, could be at a great cost, out of their own pocket or they may need to go through extensive medicals, depending on the conditions of each plan. I wanted to know if Shannon saw them as beneficial. Her answer – it depends on your needs.

[MUSIC FADES]

SHANNON: I definitely see people retiring without health benefits. But I do see it becoming a bit of an issue with you know their dental work that’s necessary, and it’s very expensive, like this kind of thing. But I would say health insurance can be really expensive also. And so it’s really the balance around like, what is the benefit that you think that you would get from the program versus what the premium is every single year. Right? Because if you’re a person that thinks, like, well, I might spend $3,000 over the next five years on dental work, but it’s like, yeah, but you would pay like, six grand in premiums. Is that worth it? It can be worth it. And it’s really custom. It’s really about your needs. And if you have prescriptions that are above and beyond what might be covered through your provincial programs, that’s where I really see health insurance in retirement. I mean, it’s like in, quote, retirement, for seniors, be helpful. What’s covered or what’s free is not sufficient, right? And there’s an ongoing monthly need for extra prescriptions or something like that, that would make it something that would be worth it.

BILL: Here’s another question that I think, uh, even at my age, uh, sort of strikes a chord. And at this time of our economic lives in the country, housing, it’s just a huge issue. Now, are you aware of any financial tools that could ease the financial burden of caregiving, such as a reverse mortgage? My wife and I struggle with this constantly. Now, we live in a house that’s too big for us, but if we sell it, we’re going to have to find something that’s going to cost us just as much. And neither one of us really are in, uh, a precarious health care situation, but it’s coming. We know it’s coming. So what about that is thinking in terms of your resources and housing being one of them?

SHANNON: So I don’t love reverse mortgages, but I completely understand why they are tempting, especially given the growth in the housing market that’s happened over the last like, 15 to 20 years. The reason I don’t love a reverse mortgage versus, I guess what I would rather someone do is get a secured line of credit against the house. If you’re able to qualify for that and then use that, it’s still debt against your house, which is the same thing as what a reverse mortgage is. So what a reverse mortgage is, basically like, you use the equity in your house and it just becomes almost like a mortgage, right?

 So it’s like a debt that goes up, but it’s paid for by the equity in your house. So it feels like you’re tapping into the equity of your home without the anxiety of like, qualifying for this and paying it off every month and this, that, and the other. But you are being charged interest, and it is just being paid off by the equity in your house. And eventually what happens is you don’t have the same amount of equity in your house. So where I’ve seen this be tricky is it depends on how long it goes on for. So an emergency situation is one thing. Let’s live off of this because we can’t make it work, is a red flag for me. Because one would keep going into debt with the house and then there’s no equity left. So if there ever is a situation where you need to sell and downsize or anything, there’s not a lot of equity left in the home, because you’ve spent it. And so it’s almost better that it’s like if this is just for an emergency for a short period of time, with an end date I’m more open to it.

BILL: Yeah well, I got a couple more questions here that I find, uh, kind of heavy, really, in a way. And the first one is, uh, this concept of involuntary separation increasingly being acquired, uh, with caregivers. Can you explain that? What is this? Involuntary separation?

SHANNON: Yeah, involuntary separation is when, let’s say somebody has a critical illness and they have to go into specialized care. And so the separation is not by choice. It’s not because we’re divorcing. And so those are two different things. Right. So, in the eyes of the law, if you separate from your spouse and you don’t live together, then you can’t claim them as a financial dependent, which is a huge tax credit. And so, that’s what you’re trying to avoid. So by claiming involuntary separation, you’re saying, hey, I don’t live with this person, but they’re still my dependent, even though we don’t share the same roof. Because I think the main thing that’s important about it is that it’s actually a beneficial thing from a financial perspective because there are certain parts of it that would be seen as a household, like, eligible for tax credits of financial dependent and all that, which you would normally be excluded from at the same time. 

Also recognizing that you’re living in two separate places, so your household income is no longer taken into account to qualify for things like the guaranteed income supplement. So normally it’s like a household, so you would maybe qualify for maybe each of you individually now would qualify for more guaranteed income supplement because you’re apart while still maintaining tax credits that are together. Like involuntary separation is an important distinction to make at tax time, so that you qualify for as many programs and tax credits as possible.

BILL: The benefit landscape in Canada for caregivers is fragmented and difficult to navigate. Do you have any suggestions for how best to stay on top of those changes and maybe I’ll add this other piece to it. How can caregivers find and apply for benefits federally and include them in their own financial planning?

SHANNON: Yeah, I know it is fragmented. Well I think that reaching out to caregiver associations like this, for example, is really important and maybe they’re not going to be the person to solve the problem, but they might be able to point you in the right direction. Second of all, I think that the all star person that you need in your pocket at the very beginning is speaking to an accountant. Because most programs and tax credits will happen through your tax return. And so that is really important to make sure that those things are happening. For the person who’s receiving care as well, all the medical tax credit receipts, the caregiving tax credit receipt, all of that stuff happens through your return. 

So if you’re DIY’ing it for free on the internet and you’re missing some of that stuff, that will hurt you. And so making sure that you’re working with an accountant, I think that’s the first person. And if you have an accountant in your province who specializes in this stuff or who knows how to navigate it anyway, they don’t specialize, but at least knows how to navigate it. I’d say that’s the first line of defence, even before the financial planning piece, which is what I do. Is just making sure that you’re maximizing the money coming in and reducing the cost going out, number one. And number two, finding that support within your province and other, um, people who have been through it. I think caregiving is one of those things where finding, I call it a circle of care, finding other people who are in the same situation as you is extraordinarily important for your finances. Which sounds funny, but, it helps you not makes rash decisions because you are speaking, you’re talking about them with someone else who’s going through it at the same time or has maybe just gone through it. And they can help you navigate it and point you to resources that you may not have even known in the first place. I think not going through it alone is also really helpful in reducing panic and overwhelm, which often leads to irrational decisions.

BILL: It often does. And Family Caregivers of British Columbia does an excellent job with support groups. Peer support becomes extremely important you know? Being in the room with people with lived experience that it’s not always technically, uh, perfect, uh, but the emotional, spiritual support you get just being in the room with other people who are struggling and almost all of them coming up to the same place of where I don’t know what to do. The choices are all bad, emotionally or financially, but I have to proceed. Yeah.

SHANNON: It’s like, which cactus do you want to hug? [LAUGHTER]

[MUSIC IN]

BILL: I appreciated Shannon’s helpful tips, smart ideas, and humour around money and finances surrounding caregiving. If you would like to learn more about her step-by-step approach to making big decisions, follow along in her book “No Regret Decisions: Making Good Choices During Difficult Times”. You can also call our BC Caregivers support line 1-877-520-3267 to speak with our trained and experienced support team members. Whatever decisions you make, we hope you are now able to navigate these stressful situations from feeling worried to feeling more confident about what’s ahead.

[PAUSE // MUSIC ESTABLISHES]

BILL: Shannon, for the listener right now who has some anxiety over their finances, what’s your number one piece of advice?

SHANNON:  Whether you’re the person who’s going to need care or you’re the person who’s going to become the caregiver in that initial moment of panic, is to make sure that you are getting good information, which we kind of just talked about. But like, aligning the team that’s going to support you and acknowledging, like, you can’t do this alone. And a promise to yourself and anybody else involved that you’ll have those tough financial conversations sooner rather than later. I think it is so important to emotionally protect yourself and your family because, it is the thing that will fester if it’s not easy. It will fester if it’s not talked about. So laying that all out on the table as soon as possible, even if it’s a messy conversation, is going to save so much anxiety and stress and guilt and resentment down the road. There’s no bad time to do that even if you’re a seasoned vet at this there is no bad time to have that big conversation.

[MUSIC DEVELOPS // OUTRO]

VOICE-OVER: Thank you for listening to “Caregivers Out Loud”, powered by Family Caregivers of British Columbia and hosted by Bill Israel. Produced and sound edited by Organized Sound Productions. We acknowledge the financial support of the Province of British Columbia and the BC Ministry of Health – Patients as Partners Initiative.

If you like what you’re hearing, discover more episodes, and find more caregiving resources at familycaregiversbc.ca. And if you find these episodes helpful, please share them with your family and friends who may find it enlightening to hear these stories.

Finally, don’t forget to subscribe to our show on your favourite podcast listening app, so you can take us with you wherever you go. Thank you for listening and taking the time to learn and care for yourself with other caregivers, out loud.