Canadians aged 85 and over represent the fastest-growing segment of the senior population. Eventually many of us are going to have to come to terms with parents who have fallen prey to the ravages of age. Our first instinct may be to bring them into our own homes. That’s the way it was when I was a girl growing up in Jamaica. My great-grandparents lived with my grandparents. Home care worked well because there were always bodies available to help. Here in Canada, where my grand aunt lived with my aunt and uncle, they eventually ran into the problem of having a parent who needed constant supervision when they both worked outside the home.

If you accept the responsibility for home care and you have siblings, you’ll not only have to deal with caring for your aging parent, you’ll also have to manage your brothers’ and sisters’ expectations, comments and involvement (or lack thereof). This can be no small feat. Some experts recommend that the sharing of the costs include a “salary” for the caregiver. So, the sibling with whom mom lives would pay nothing, while the others would chip in for support, medical care and the like.

Full-time care giving is not a responsibility to be assumed lightly. It is stressful. It is emotional. At times it can seem arduous. Ask for and accept support from family and friends. And watch for signs that you are burning out: changes in personal habits, depression and insomnia. You’ll be no good to a parent if you crack and then break.

Assuming you’re not prepared to give up your career, you’ll need some help. Paid-for home care can be very expensive—upwards of $5,000 a month for 24-hour a day care. While the government may cover a percentage of the cost of in-home nursing, when it comes to personal care—bathing, meal preparation and the like—you’ll have to foot the bill.

To prepare for the day when your parents may need your help, make sure they’ve executed durable powers of attorney for both financial and personal care. As your parents’ legally assigned representative, you’ll be able to access their bank accounts to pay for their expenses. You’ll also be able to make decisions about their long-term maintenance and health care.

You should also prepare for the day when at-home care is no longer a reasonable alternative. People tend to move to institutions as their metal and physical conditions deteriorate. To get your head wrapped around this option, visit your local seniors’ facilities so you know what’s out there, and if necessary, put your parent on the waiting list. Costs vary dramatically so make sure you have a back-up plan in case your first choice is too expensive. RBC Insurance has a list of long-term care provisions available by province.

If you’re worried about how you’re going to pay for all this, then you may want to look into long-term care insurance. Premiums aren’t exactly small change, but if you think your parents will live long and even slightly unhealthy lives, the premiums look like a drop in the bucket when compared to the out-of-pocket cost of long-term in-care.

Pet food and veterinary care aren’t cheap, Tina Di Vito, head of the BMO Retirement Institute told MoneySense.ca ahead of a report on what the bank calls “estate planning 2.0.”

Pet owners account for nearly half of Canada’s population and while 76% feel it’s important to make arrangements for the ongoing care of their pets, only one-third have included their furry friends in their estate plans, BMO found.

Finding a caretaker and allocating a reasonable amount of money to them in case of you die or become incapacitated at an early age will minimize the risk of the pet becoming abandoned or given to a shelter, Di Vito said, adding that a pet cannot be named as a direct beneficiary in a will.

Pets aren’t the only ones being left out of estate plans, according to the report, entitled “The New Frontiers of Estate Planning: Parents, Digital Assets and Pets.”

Two-third of Canadians haven’t included aging parents for whom they provide care in their plan, the bank found.

Of them, 39% said they had not included an older parent, relative or friend because the probability of out the loved one living them is too small. The probability might be small but the consequences cannot be underestimated.

“It’s understandable that the idea of including your own parent in an estate plan seems out of the ordinary but, with today’s aging population, it’s necessary,” Di Vito said. “Being proactive is critical in ensuring that your loved ones are well taken care of in the event they outlive you.”

Di Vito suggests discussing the issue of parent care with siblings and parents before including them in an estate plan.

Digital assets are also changing the way people look at estate planning. It used to be that only financially established individuals or adults with dependents needed an estate plan. But these days even young people are building sizeable assets in the form of multi-media libraries.

Social media accounts, photos, music, even loyalty points have value, Di Vito said. “If you are no longer there, who is going to know who gets what?”

Older Canadians are building digital assets too but 58% have not considered them in their estate plans, BMO said.

Safeguarding and distributing digital assets in an estate plan will help keep your loved ones from scrambling to close out email and social media accounts, access online financials, photos and music.

In most cases, password sharing is discouraged so it’s still unclear exactly how digital assets should be managed posthumously but recording your preference in an estate plan can’t hurt.

“This is an up-and-coming topic,” Di Vito said.

Lise and her brothers realized their mother was facing a hard road. How could they ensure their mother was safe? How could they honour their mother’s wish to remain in her home “until she was carried out feet first?” And how much would it all cost?

Chances are you or a loved one will one day be in a situation much like the Hafners, where you’re making arrangements for an aging parent who needs help with daily activities. And like Priscilla, most people probably prefer to get that care in their own home, at least while it remains a viable choice. Unfortunately, just understanding the patchwork system of private and public senior care is no small feat.

To help, we’ll describe what you can expect from in-home care. Then we’ll advise what help governments typically provide, and what you’ll need to pay for yourself. We’ll help you understand when in-home care makes the most sense, and describe when a retirement residence or a nursing home are better alternatives. You may be surprised to learn these options are more attractive than you think.

Get by with a little help. When a parent or other relative starts to get frail, daily tasks often start to slip. Perhaps housework and yard work start to build up, and it is hard to keep fresh food in the fridge. The parent may no longer drive, and may have trouble managing basic activities like bathing, changing, preparing meals, or keeping track of their medications. The children often get more involved at this stage, but they are probably busy with their own families and jobs, and may not even live close by. It’s easy to feel overwhelmed.

“Get help before you’re totally exhausted,” suggests Peter Silin, a care manager and principal with Diamond Geriatrics, Inc. of Vancouver. (Care managers are typically hired by families to oversee care for a loved one.) There’s a whole industry of in-home caregivers devoted to helping frail seniors with daily activities. While you may feel guilty about off-loading these tasks, you’ll find that it frees you up to spend more meaningful time with your parent.

When you think of in-home care, you might picture it being done by a nurse. But most paid care in the home is provided by legions of hardworking paraprofessionals with job titles like “personal support worker” or “personal care worker.” They don’t have medical training, but they know all about helping with mundane activities like bathing, changing clothes, toileting, grooming, getting groceries, preparing meals, helping frail seniors eat, doing housework, driving to appointments, and helping your loved one get around the house. You can hire these personal care workers yourself, go through an agency, or sometimes get these services assigned and supported by governments. Providers range from non-profits like the Victorian Order of Nurses, to small local businesses, to large national companies.

If your loved one is mobile and needs just a bit of help, a personal care worker might come twice a week for two hours each to help with bathing and grooming. If your parent needs more help, the worker might come once a day to help with changing, toileting and preparing a hot meal as well.

Other home care needs may arise on a shorter-term basis, such as after an operation. (And here nurses are more likely to directly provide care.) Or if an elderly person is near the end of life, the hospital may send him or her home to be with family but have a nurse stop by periodically to provide pain medication. That’s what’s known as “palliative” care.

When Diane Speirs’s aunt came home from the hospital in Vancouver after falling and breaking her arm, a personal care worker visited for up to 1½ hours every day to help her change clothes and sanitary garments, clean the bathroom and kitchen, help her bathe and do laundry. But Diane and her husband Brian also visited four or five times a week to bring groceries, help with housework and yard work, pay bills and take her to doctor’s appointments. “We did whatever else needed to be done,” says Diane.

Who picks up the bill? At this point you’re probably wondering who pays for all this care. The good news is provincial governments will help out—but only so much. Short-term post-operative or palliative care are frequently covered, but beyond that, governments keep a tight hand on their wallets.

Typically provincial governments provide in-home care through a regional health agency. (They’re called local “health authorities” in B.C. and “community care access centres” in Ontario.) If you’re looking for government help, you can get a referral from the family doctor or contact your local health agency directly. On request, they’ll generally send a case manager to assess your loved one’s needs. They allocate their support based on need, and in some provinces, also on your ability to afford care yourself. The maximum you can generally expect government to pay for is two hours a day, says John Schram, president of the Canadian Home Care Association. Unfortunately, “that quite often isn’t enough. There’s a huge gap between what people need and what they typically get,” says Schram, who is also CEO of We Care Home Health Services LP.

Nothing is automatic, even for basic forms of government-paid help: you need to make your case persuasively. For example, in Ontario, “the government realizes that if the risk of falls can be minimized, there’s a better chance of keeping that senior safe and in the home,” says Audrey Miller, care manager and managing director of Elder Caring Inc. in Toronto. “What I’ve learned in my time is the way to get some help with bathing is to say something like ‘My mother had a fall. I’m concerned she’s at risk while bathing because she lives alone.’”

For what government or family members aren’t able to provide, you’ll need to pay for yourself—and the costs quickly escalate. Personal care workers hired through an agency typically cost $20 to $28 per hour, often with a minimum of two hours or more per visit. A full-time, live-in personal care worker can cost $1,800 to $3,000 a month, plus room and board. (Add another $1,500 to $2,000 a month if room and board is not provided.) If you need round-the-clock care, that may require two or three full-time caregivers. (Even live-in caregivers can only be asked to work one shift a day, and they require time off.) While most middle-class seniors can afford to pay for a little bit of help, you can quickly get to the point where only the very rich can afford it. “If money is not an issue, you can always make in-home care work, but it might mean making your home into a hospital,” says Miller.

Better than you think. Eventually you’re likely to go beyond the point when in-home care makes sense. Just where that point lies is different for everyone. It depends on your loved ones specific needs, personal preferences, finances, and the practical difficulties of providing extensive care in a family home. Fortunately, the other options are probably better than you think—and they are often within financial reach for middle-class Canadians.

A retirement home may be a good choice for seniors who want their own apartments but also want common meals, housekeeping and social activities in a home-like setting. They often have “independent living” sections for mobile residents who require little or no personal care, as well as “assisted living” for those who need moderate help with bathing, changing, or taking medicine. While retirement homes are not cheap, middle-class Canadians can usually afford them with the proceeds from selling their home.

If your loved one needs a lot of care—say he or she has advanced dementia or requires help with the most basic activities like transferring from a bed to a chair or toilet—it may be time for a publicly supported and regulated nursing home. We know what you’re thinking. The idea evokes images of dreary Victorian-era wards, but nursing homes these days are much homier and less institutional than you may think. (Confusingly, nursing homes go by many other names these days, such as “long-term care” in Ontario and “residential care” in B.C. )

Even if you can afford the most elaborate and expensive in-home care possible, your parent may prefer the social interaction of a retirement residence or nursing home to isolation. “You can buy all the services you need at home, but you can’t buy a community, a peer group, which you can get in assisted living, independent living or a nursing home,” says care manager Silin, who is also author of Nursing Homes and Assisted Living.

The Hafners’ journey. The right care option for your parent or loved one is ultimately a personal decision. Consider the journey the Hafners went through after Priscilla was diagnosed with Alzheimer’s. Lise and her brothers, Eric and Gordon, realized they needed help to keep her as safe and happy as possible.

The three siblings lived many miles away with families of their own in separate U.S. cities. As a result, they were limited in how much time they could spend directly caring for their mom in Toronto. Priscilla was an energetic, no-nonsense woman who had lived on her own since her husband died in 1994. But the combination of an independent spirit and the symptoms of the disease made their mother difficult to help. She turned down pleas from her children to move closer to one of them. That’s not surprising: seniors with Alzheimer’s tend to cherish familiar surroundings and get along best with people they know.

Lise and her brothers started off hiring a driver to take their mother to her daily appointments and other outings. That was enough for a while, but as the disease progressed they found Priscilla needed more. The next step was finding a live-in caregiver and making a few changes to the townhouse, like removing the knobs from the gas stove. Eventually they needed three live-in caregivers providing round-the-clock support. The siblings realized they were unable to coordinate all of this from afar. “Don’t underestimate the logistics,” Lise advises. “It’s expensive. It’s exhausting. It’s emotionally draining.”

The Hafners hired Audrey Miller of Elder Caring Inc. as care manager to handle the staff, monitor their mom’s condition, and take her to doctor’s appointments.

Gradually the elaborate system of in-home care became unworkable. As Priscilla’s Alzheimer’s got worse and other medical issues developed, they realized her home was no longer safe. And although they felt conflicted, they realized the need for safety trumped their desire to fulfill their mother’s wishes to stay in her home. “The time came when we just could not keep her in her home any longer,” Lise says.

So recently the three kids moved Priscilla to a facility that provides long-term specialized care for seniors with dementia. Now they’re working to make life as rich as possible in this new setting. “Is it ideal?” Lise asks. “No. But I think we all have a sense of relief, because we know we’re over the first major hurdle, because she is safe.”

At first, we didn’t want to consider the
second option. We were fuzzy about the
difference between retirement homes
(which are meant for relatively healthy
seniors) and nursing homes or long-term
care facilities (which are intended for those
who need extensive nursing attention).
Retirement homes sounded too institutional
for what my parents needed.

As we researched the matter, however,
we were pleasantly surprised at what retirement
homes had to offer. The facilities
were far nicer than we had expected. Most
important, the homes allowed seniors like
my parents, who continued to cherish
their privacy, to live in their own apartments.
The homes provided housekeeping,
meals in a common dining room, 24-hour
emergency assistance, and other support,
but otherwise left residents with the
independence they had always enjoyed.
We were pleased to find that retirement
homes really did feel like homes and not
like institutions.

While leaving the family home behind
is never easy, my parents eventually
decided that the retirement home option
would work for them. They moved into
one in Victoria three years ago.
While my Dad has since passed on, my
relatively hale 80-year-old mom continues
to live comfortably in her new home. She’s
made friends, finds the food quite tasty,
and appreciates not having to do her own
housekeeping. She likes the home’s many
activities, such as “sit-and-be-fit” classes,
and enjoys taking walks around the welltended
grounds.

Her comfort has made her kids comfortable.
I live in Ontario and one sister
lives in California, but another sister lives
nearby in Victoria and drops by frequently
to visit my mom and have meals with her
in the home’s dining room. Management
and staff are friendly and attentive. Live-in
managers keep tabs on how each resident
is doing and will check in on an ailing
senior who unexpectedly misses a meal Common rooms are well-furnished
with
comfortable and attractive furniture. Art
decorates the well-lighted hallways. While
aging is no picnic and she misses my dad,
my mom is content with the lifestyle she
has found at her retirement home.

If you’re interested in a retirement
home for yourself or a relative, let me
offer you a few tips from my own family’s
experience as well as from the broader
experience of experts.

Assess what you really
need  Retirement
homes provide different levels of support.
Mobile seniors like my mom require
only basic support such as common meals,
housekeeping and 24-hour emergency
response by live-in staff. Derek Mercey,
an industry consultant and vice-president
of Care Planning Partners and The Care
Guide Inc., which publishes guides to
retirement homes, estimates about 25%
of retirement home units are devoted to
providing this level of basic support.

Seniors who need a bit more support
should look for homes that provide help
with administering medications as well
as with essential physical activities such
as bathing and dressing. This set-up is
sometimes called “assisted living,” but
terminology varies widely from province
to province, so make sure you understand
the term used in your locale. Such facilities
make up about 75% of retirement home
units, according to Mercey’s figures.

If you want to make sure that you or
your parent can stay put as frailties grow,
you should consider homes that offer
“aging in place.” These homes allow you
to start off with modest levels of support
when you’re relatively healthy, but ratchet
up the support level as you need it. Just
remember that there are limits. If you need
intensive nursing support, you probably
require more help than a retirement home
can provide and will need to consider a
nursing home or long-term care facility.

Price matters
 Retirement homes can
be expensive. Count on paying $2,000
to $3,000 a month for a studio or small
one-bedroom unit for a single person.
That figure typically covers rent, meals,
housekeeping and basic support needs.
If you share your apartment with your
spouse, you will probably pay an extra
$500 to $700 a month. If all of that adds
up to simply too much money, small units
away from major cities can go for as little
as $1,500 a month, Mercey says. On the
other hand, if money is no object, you
can find luxurious one-bedroom units in
downtown Toronto or Vancouver for as
much as $8,000 a month.

But deals can be found  While
a
retirement home may seem too expensive
for your budget, take heart. Don’t forget
that government pension plans, such as
CPP and OAS, will pay you up to $16,600
a year in retirement. Assuming you have
a paid-off home that you can sell, as well
as a small nest egg, you should be able to
raise another $300,000 or so — and since
you probably won’t need a nursing home
until your late 70s or later, you can be fairly
aggressive in drawing down that money.
Between the government pension plans
and your savings, you should be able to
generate a bit over $30,000 a year in income.
That should cover the cost of a small
apartment for an individual in a modest
retirement home.

If your income doesn’t stretch that far,
and you live in British Columbia or Alberta,
you can look into publicly supported
retirement homes. These homes will often
gear your rent to your income. Another option
is non-profit homes, which typically
cater to specific groups or communities.
But be warned: you may have to do some
research to find these homes since they
often do little beyond world-of-mouth to
promote themselves.

Get your tax breaks
 If you have a
marked restriction in some specific basic activities
like walking and dressing, be sure to
check out your eligibility for the Disability
Tax Credit, and the Medical Expense Tax
Credit for that portion of your retirement
home costs attributable to attendant care.
“I’ve found that these credits get missed
fairly frequently,” says Trisha MacLennan,
a financial planner in Burnaby, B.C. She
gives occasional talks on financial planning
at seniors homes and has found herself
peppered with questions about these
complex credits from seniors who hadn’t
realized they might be eligible.

Earlier is
better  Most people don’t
move into a retirement home until they’re
in their late 70s or early 80s. Don’t leave
the decision until the last minute, however.
Otherwise an unexpected illness
or injury might force you into a quick
choice when you’re not ready. “It is a very
difficult thing to talk about,” says Esther
Goldstein, an expert on retirement homes
and author of The Comprehensive Guide to
Retirement Living. But, especially if you’re
dealing with aged parents, Goldstein
recommends you have the conversation
as early as possible.

Trust your eyes
You should take a
tour of any home that you’re considering.
Most allow you to have a meal on site and
talk to other residents. Many retirement
homes also let you arrange a trial stay
that can range from a few days to a few
weeks. Goldstein suggests you try to stay
at least a full week to see how the home
functions during weekends and other
off-peak times.

Consider home care
 Retirement
homes aren’t always the best option.
Many seniors find that additional support
from family members or from paid
providers in the family home works better
for them. But be realistic about how much
help family members can provide. Who
will cover for you when you go on vacation?
If family members simply can’t do
the job, you may want to consider having
outside providers come to your home.
Some provinces will help arrange subsidized
in-home support, but governmental
assistance is often very limited.

Location, location
 Based on my own
family’s experience, I think it’s vital to
try to find a home that is reasonably near
at least one of your kids. Despite all the
support a retirement home can provide,
there’s no substitute for family members
in the vicinity.

Do your reading 
Several directories list
retirement homes. For homes in Alberta,
B.C. and Ontario, check out www.the
careguide.com and The Care Guide Source
for Seniors, put out by Care Planning
Partners Inc. In Ontario, take a look at
www.senioropolis.com and Goldstein’s
Comprehensive Guide to Retirement Living
(she plans to expand her research to other
provinces later this year). For homes in
British Columbia, turn to www.seniorshousing.bc.ca, sponsored by the nonprofit
Seniors Services Society. In Alberta,
check out www.ascha.com, sponsored by
the Alberta Senior Citizens’ Housing Association,
an organization of retirement
home providers.

Both Brad, 36, and Michelle, 34, say they love being parents. When I look over at Finleigh, who is holding her index finger up to her lips and shushing us for making too much noise, it’s easy to see why. She’s busy setting up a make-believe tea party.

So why not have another Finleigh, another Ruarie? Michelle says the problem is money. It’s not so much the cost of the diapers and formula as the loss of income. Michelle quit her job to work from home so she could look after her two young daughters, and that decision has meant a big pay cut. Add in the mortgage, saving up for the kids’ education and paying down their own debts, and Brad and Michelle’s finances are being stretched to the snapping point. They would like to have a third child, but they’ll probably be forced to stop at two.

Brad and Michelle aren’t the only young parents who are finding that they can’t afford to have as many children as they would like. Across the country millions of other young parents are reaching similar conclusions. Without much in the way of comment or debate, Canada has become a country where small families are the norm — and those small families are shaping a demographic crisis that is going to hurt all of us over the decades ahead, whether we have children or not.

To understand why, consider the amazing shrinkage of the Canadian family. As recently as the 1960s, families used to span an average of four kids; today, the typical family includes a mere 1.5 children. Since today’s parents aren’t having enough kids to replace themselves, Canada’s population growth has slowed to only 1% a year. Two-thirds of that meagre increase comes from immigration rather than new babies. Soon we will rely completely on immigration to keep Canada’s population from shrinking.

Slow growth is a problem because many of our social programs — notably Old Age Security and Medicare — were designed back in the days of tail-finned cars and four kids to a family. Both plans raise money by taxing those who are working. But since Canada’s population is aging, fewer and fewer people are working for each retired senior. Right now there are five working people for every senior; within 25 years, there will be only half that many. Given the dismal math, the federal government will face two ugly options in the decades ahead. It can reduce benefits or service to the elderly or it can tax the young even more heavily to support the millions of grey-haired boomers now beginning to slide into retirement. “If you expect to get all of those nice government payouts when you retire, you better hope that people have lots of kids,” says Malcolm Hamilton, an actuary with Mercer Human Resource Consulting in Toronto. “Because if the next generation is too small, you’re going to be outta luck.”

The tug of war between the generations has already begun. Over the past three decades, governments have consistently funded and enriched programs for seniors. Meanwhile, young families are finding it increasingly difficult to make ends meet. As a result, they’re reducing their number of kids — which has the effect of ensuring the problem will grow even worse in years to come.

You can’t blame young couples for their decision to have fewer children than their own parents. Over the past three decades, total family incomes in real terms — that is, adjusted for inflation — have actually gone down. Statistics Canada says the median family income in 1980 was $58,000. Twenty-seven years later, it’s $57,700. (Both figures are expressed in 2005 dollars to remove the effects of inflation.) But stagnant incomes are not the worst problem. A generation ago, it took just one working parent to generate that median household income. These days it takes two.

As a result, child-rearing has become a monumental financial challenge. In the early 1970s, when 70% of families had only a single income earner, raising kids was demanding, but the only financial penalty you paid was the actual cost of raising each child. Today, both parents work in 70% of families. When they decide to have a child, they pay a double penalty. They pay the extra expenses of raising each child. They also pay with a huge drop in income since one parent has to take time off work.

Young families are facing a much bigger challenge in making ends meet than earlier generations, says Hamilton, one of Canada’s top experts on pensions and aging. He calculates that after expenses, many working families don’t have much more to spend on themselves than senior couples on welfare. That’s an appalling finding. But instead of helping young families, Ottawa taxes them to death. Why? “Because they look rich, even though they don’t have any discretionary income,” Hamilton says.

The financial illusion persists because the income tax system looks only at what you make, not the demands that you face. According to 2003 Statistics Canada data, the average total income for couples with children is about $87,000; the total income for a senior couple is about $50,000. Since young couples have higher incomes, they pay two-and-a-half times as much tax as senior couples.

The problem with this system is that young couples also have many more fingers reaching into their wallets than seniors do. While seniors have paid off their homes and raised their kids, the young still have to contend with mortgage payments, car payments, diapers, and university tuition for their kids. As a result, the average middle class family with kids has only 4% of the household’s gross income left over each year, compared to 13% for senior couples.

If you agree that people should be taxed according to their ability to pay, the current system is brutally unfair because it focuses on income, not wealth. In 2005 the median net worth of couples with children was a meagre $189,000. The median net worth of senior couples was more than twice as high, at $443,600. Look at those figures and you have to think that if anyone needs tax breaks, it’s not people in their 70s, it’s people with seven-year-olds. But the system works in just the opposite fashion.

The tragedy is that young parents still want good-sized families. Demographers at Statistics Canada noticed a few years ago that when they asked Canadians how many kids they would like to have, the average number was 2.5 — in other words, one full child more than they actually go on to have. Why the discrepancy? It seems that young couples adjust their plans when they run into the economic realities of having a child.

Hamilton believes our national priorities have gone askew. “It’s not a matter of charity, of giving people money to raise kids,” he says. “It’s a matter of letting young couples keep more of the money they’ve earned, because their children are a future asset. The question is: should we view children as just another family expenditure, like a car, or as something that benefits all of society?”

Brad and Michelle can tell you all about the trade-offs involved in having a child. Before Finleigh was born they both worked full time. They enjoyed foreign holidays and went out with friends three times a week. But when Finleigh arrived, Michelle’s pay plummeted to less than half of her previous wage. The standard one-year maternity benefit in Canada is 55% of your pay, but it’s capped at just under $22,000, so most middle-class parents don’t even get the full 55% income replacement.

When her maternity leave was up, Michelle could have put Finleigh in daycare and gone back to her corporate job, but daycare would have cost $15,000 a year. Brad and Michelle crunched the numbers and decided that if Michelle worked for herself from home while looking after Finleigh, they would be better off. So she set up a home office in their musty basement and took on freelance communications projects, working whenever Finleigh napped. The arrangement worked fine — until Ruarie arrived on the scene.

Since Michelle was self-employed, she wasn’t eligible for maternity benefits. She couldn’t work with a newborn on her lap, so for a while, her income largely vanished. Brad and Michelle now had to support two young children on a combined income that was close to half of its pre-child total.

They tried to cut costs, but found that some costs can’t be cut. Like many young families, they had bought their starter home just before their first child was born. While both were bringing home paycheques, the mortgage consumed a reasonable 25% of their income. When Michelle stopped earning money, though, the mortgage devoured almost half of Brad’s take-home pay. Of the remainder, about $10,000 a year went toward running their cars, $4,200 to utilities and cable and $2,400 a year to property taxes. Then there was clothing, diapers and insurance. Plus “you feel pressure to start saving for your kids’ university tuition,” says Michelle, “so we’re doing that, even though I’m still trying to pay off my own student loan.”

When they totaled up all their expenses, they discovered that they hadn’t budgeted for groceries. “So I started working again when Ruarie was just five weeks old,” says Michelle. “But it’s difficult to do with a newborn and a three-year-old. Sometimes I get up at five in the morning so I can do some work before Brad leaves for the day. The other night, I worked until midnight. During the day, I’ll put the kids in their rooms for half an hour so I can make a couple of phone calls. It’s a juggling act.”

Brad says they’re now in “a holding pattern” which he thinks they can maintain until Finleigh and Ruarie are older, as long as they continue to stick to a very tight budget. They’re getting by, but another child could push them over the edge. “We’re realizing that for us to have a third would mean moving,” says Michelle. “Plus, we’d have to get a new car. There’s just not enough room in our car for three child seats.” A third child would also consume Michelle’s few remaining hours for freelance work and make their finances impossible.

Ottawa’s attitude toward the Finleighs and Ruaries of the world has long been one of disinterest. It doesn’t see any reason to discourage kids, but it sees no rationale to encourage them either. Government views children strictly as an individual decision — a personal expenditure that is your choice and not one that other taxpayers should be tapped to support.

This attitude makes sense up to a point. No one wants to be called upon to bankroll the eighth or ninth child in a neighbor’s brood. But as fertility rates have declined well below replacement levels, our lack of pro-family policies seems increasingly senseless. If we don’t encourage kids, who is going to support any of us in the future? Just as childless couples in Victorian times had to worry about who would look after them in their old age, so we as a society now have to worry about who will pay for the social programs we’ve promised ourselves.

There is also the question of justice. The government typically looks at the entire income of your family when judging your eligibility for welfare or social programs. But when it comes to taxing you, government switches course and views each of us as an individual, whether we’re supporting just ourselves or a family of six.

This isn’t the way the rest of the world works. Jack Mintz, director of the international tax program at the University of Toronto’s Rotman School of Management, says that almost every other developed country encourages larger families by offering tax deductions for kids, and those deductions are worth thousands of dollars. “You should recognize that it costs more for a grouping of many people to live on a given income than a single individual,” Mintz says. “Most other countries offer more in the way of deductions or credits for children than Canada does.”

France, for instance, has a very different view from Canada on how taxes should be levied. Rather than taxing its citizens as individuals, France taxes family units. Each family files a return, showing its total income and total number of people living on that income. The family can allocate that money for tax purposes among family members to better reflect how it is actually spent.

This system amounts to income splitting and it can dramatically reduce the tax a family pays. A husband who earns the equivalent of $90,000 can split it with his stay-at-home wife so that each pays tax on only $45,000. In fact, France goes even further and allows parents to split incomes with their kids too (each of the first two children is worth half an adult, and subsequent kids are worth a full adult). The more children you’re supporting, the lower your tax rate.

Danièle Bélanger says lower taxes made a huge difference to her family’s standard of living during a year in France. But taxes were just the beginning. “In France, the general premise is that the majority of families have two working parents, so the infrastructure is designed from the ground up to meet the needs of people in that situation,” says the married mother of three. “In Canada, the majority of families have two parents working too, but the system hasn’t changed since the ’60s, when the mother usually stayed home.”

In France, access to licensed, affordable daycare is viewed as a right, says Bélanger, a sociology professor in London, Ont. Daycare is available for children six months old and up and the cost is subsidized and geared to income, so it’s affordable for everyone. Those with three or more children are rewarded with an extra monthly allowance of about $400, plus the famous carte famille nombreuse (“the large family card”). This token of appreciation to large families provides the kinds of benefits usually reserved for seniors, such as 50% off train tickets if you book in advance, 25% off the Paris subway, and discounts at museums and art galleries. “The general feeling is that society should share the costs of large families because we all benefit,” says Bélanger. “Whereas here in Canada, the attitude is it was your crazy decision to have kids, so the more you have, the poorer you’ll be.”

France proves that fertility follows finances. In most European countries, fertility rates have been declining for 40 years. They’ve recently reached crisis levels in countries such as Spain, Greece, Italy and Germany. But not in France. There, the fertility rate has been steadily rising. Couples now average two children. This is the balancing point at which parents are replacing themselves, ensuring that the country doesn’t shrink, and it seems to have been reached largely as a result of France’s deliberate policy of encouraging kids.

The correlation between government support for children and high birth rates is the opposite of what most people would predict. Conservative pundits argue that the best way to reverse the decline in birth rates would be a return to a traditional society, in which the father works and the mother stays home to look after the kids. But the evidence indicates that the reverse is true. Countries such as Spain, Greece, Italy and Germany, where fertility rates have dipped to dangerously low levels, have more traditional cultures that favor stay-at-home mothers. Countries where fertility rates are higher, such as France, Norway and Sweden, have more progressive governments, which provide generous maternity benefits, subsidized daycare and child tax deductions that make it easier for women to have both kids and jobs.

Which type of country do we want Canada to be? Right now, our fertility rate is at 1.5 and dropping. Europe’s experience indicates that if we continue to implement policies that pretend most women stay at home with the kids, we will see our fertility rate slide to around 1.3, the same as in Greece, Spain and Italy. On the other hand, like France, we could bring in policies that encourage young couples to have larger families.

A 2002 study by Kevin Milligan, now assistant professor of economics at the University of British Columbia, suggests that if the will is there, we could easily follow France’s example. Milligan looked at the link between public policy and fertility levels by analyzing data from the Allowance for Newborn Children, a baby bonus program that ran in Quebec from 1988 through 1996. He found that the program, which gave families sizable cash bonuses for having children, succeeded in encouraging an extra 93,000 births that would not have occurred without the program. But the program was eventually cancelled because of its cost: Milligan estimates that each additional child cost about $15,000 in public funds.

When you consider that every child will pay hundreds of thousands of dollars in taxes during their working lives, perhaps the expense is worth it. For that matter, you can ask mothers such as Irma Grande-Bergeret, who put off having her daughter Brianna until she was almost 41 for financial reasons, how much difference a little money makes.

Irma lives with her husband Jules and three-year-old daughter Brianna just north of Bolton, Ont. She says that when she married Jules 18 years ago, they “weren’t mentally prepared” for children, but then when they decided to have kids a few years later, it was finances that got in the way. Jules, who works as a window-installer, had periods where he was only working seasonally, and sometimes it was Irma’s salary that kept them afloat. There was no way they could afford to live on just 55% of Irma’s pay, even during a shortened maternity leave. That’s why she waited until Jules had a more regular job, she says. But they had to wait so long, Irma was almost too old to conceive by the time she felt they could afford a child.

Having a child has turned out to be even more expensive than the couple thought. There was the cost of moving out of their tiny place in the city to a house in the country, so Brianna could have a backyard to play in. Then there was daycare. “I’ve paid over $13,000 a year for Brianna’s daycare, yet they only let you declare $7,000 on your taxes,” Irma says. “Why don’t they recognize the actual cost?” Moving and daycare expenses grew so high that the couple had to cash in some of their RRSPs to tide them over. Their emergency fund of $5,000 has dwindled to $2,000.

Irma gets up early every weekday, drives Brianna to daycare, then makes the hour-long drive to Toronto where she provides vocational rehabilitation services for injured workers in the food industry. Every day at 4:30 p.m. she rushes out the door and drives back to Bolton to pick up Brianna from the daycare before it closes. If she has grocery shopping to do, she tries to squeeze it in at lunch. “I don’t have the choice not to work any more,” Irma says. “And financially, things are much harder. In the end it was finances that kept us from having two kids — we just weren’t sure if we could afford it.”

Couples such as Irma and Jules show the reality of having kids in Canada. Few people say, “I’m not going to have any kids because they’re too expensive.” Instead, families simply stop after one or two kids because life becomes too difficult. Roderic Beaujot, a professor of sociology at the University of Western Ontario, says the trend to small families is making him nervous. Statistics Canada predicts that seniors aged 65 and over will outnumber children within eight years. This will be the first time in Canadian history that the grey-haired set will be larger than the 15-and-under group. The population shift suggests that kids could be sidelined as we cater more and more to the needs of aging boomers. “[The trend] indicates a society that’s not open to children and the renewal, youth and creativity that children represent,” Beaujot says. “An aging society is a different society. It’s one that will focus on the elderly. As society gets older, there will be less and less concern about youth and young people.”

The solution to our demographic dilemma involves a few simple remedies. Mintz, the tax expert, says the first step would be to reward people who have children with substantial tax deductions — not the paltry amounts they get now, but real deductions that acknowledge the true magnitude of the costs involved when families decide to add another mouth to feed.

Better pay for new mothers would help, too. Beaujot says that when he asks what changes would have the biggest positive impact on young families, his students always say that longer leave and more maternity pay top the list. Most countries with higher fertility rates than Canada offer more than we do.

The third prong to the solution would be better daycare. The debate over whether it’s better to give parents more money to spend on private daycare or offer subsidized universal daycare rages on. In the meantime, parents make do with a woefully inadequate government stipend of $100 a month per child under six.

If the government continues to do nothing, our demographic destiny is inescapable. Right now, we’re putting the needs of older Canadians ahead of the needs of young families and their children. We’re focusing on our past instead of the future. It’s easy to understand why young couples such as Brad and Michelle are having fewer children, given the economic realities.

Unless Canada changes, we’re shaping a future in which a greying population will look to the young for financial support of its favorite medicare and pension programs — and the young won’t be there. Encouraging couples to have children helps everybody. We can make simple changes that allow families to have the kids they want, or we can sit back, do nothing and wait for our looming population crisis to hit us in the face. It is our future, and it is ours to decide. ]]> http://www.moneysense.ca/2007/09/28/the-war-on-the-family/feed/ 57