Found out parents are not in good financial shape.. (Canada)

[fullpampers]

My parents are separated, but legally still married and living under the same roof.

I was talking to my mother about money and I asked how they were doing. She told me she didn't know, and that my father refused to talk about it. Saying they were fine...

My mother just retired at 60 because she wasn't able to work anymore (psychologically). My father is 63 and disabled after two strokes.

So yesterday I went over to their place to make a budget with them to track their spending and see how much they had invested, etc.

Here is what I came up with:

Father makes 13k a year from disability, has 33k invested with BMO, spends 18k a year....

Mother makes 12.3k a year from pension/provincial pension, has 9k invested, spends about 4k a year.

The spending has been approximated since they don't track it well.

The house and car are payed off.

But from what I see, if everything stays the same and my mother pays for my father's excess spending they have about 4k extra money a year. Which probably won't be that since they are not tracking their spending really well, and I'm not sure my father is going to be pro-active in cutting the spending...

So budget wise, I can't really do more than try to find them better deals on what they have/use as services, and hope that my talks on tracking their spending and reducing it will have made it's way inside their heads. My mother is on board. My father seems to be too, but he can be saying yes to my face, and then not giving a shit a just doing what he wants.

For investments I was thinking of proposing that I open a questrade account for each of them, and transfer their savings there, using a CCP portfolio (http://canadiancouchpotato.com/wp-content/uploads/2016/01/CCP-Model-Portfolios-Vanguard-2015.pdf). Either balanced or cautious, since they are older.
That way at least they won't have to pay high fees on their investments, but it's not like these amounts is going to do them any good...

If I can get my father to not over spend, I could persuade my mother to put more of her money in a TFSA, so she could at least pay for house/car repairs, which right now they can't...

Is my reading of the situation good? or am I missing something?

Right now they can keep living as is if my mother pays for my father's overspending, with basically no money left at the end of the year or for emergencies. They keep finances separate. My father pays for the house stuff and food, my mother pays for extras on groceries, some consumables, and her car/gas. But they have some repairs coming up on the house (roof, windows,...), and I don'T know how they are going to pay for them.

Thanks..
J-S

[Goldielocks]

OAS security, and any GIS for low income (likely not with disability at 13k) should kick in at age 65 for them.  Only 2 years for your Dad.

If they were still married, then the GIS Allowance may have kicked in for your mom at the same time, but as they are separated, that shouldn't happen... but check into it...  ETA -- It appears that "Spouse" or "common-law spouse" is the requirement for it...   if they were still "spouses" then GIS kicks in when combined income is less than $41k --

Honestly, $25k per year should be ok.   

Maybe your dad wants to move into assisted living soon, and your mom to a cheaper place on her own.   Assisted living will take most of his OAS & disability, but leaving at least $150/month of spending for your dad, plus whatever small amount remains from investments.

NOTE -- You mom's pension should be splitting benefits or credits with your dad.. unless separated for many, many years?  (and vice versa)  Check into it.  It looks like she lives rent free, too, if so, then it is more than "fair" that her pension benefits are allocated to your dad for the proportion of years that she accrued them while married. 

With the small amounts remaining, don't worry about where it is invested -- Dad will spend it soon enough.  Instead, see if you can get him to buy locked in GIC's maturing every 5 years, or something, with the bulk of it.

[mozar]

I would look into getting your mom to file for divorce from your dad. It might be a better deal pension/ government benefits wise.

[Goldielocks]

I would look into getting your mom to file for divorce from your dad. It might be a better deal pension/ government benefits wise.

How so?? 

[TorontoDeveloper]

I would look into getting your mom to file for divorce from your dad. It might be a better deal pension/ government benefits wise.

One of the requirements for divorce in Canada is living apart for a year. I doubt that's going to fly. And then presumably they'd want to resume living together once the divorce is finalized, making them common-law married regardless. I know there is no difference tax-wise between married and common-law. I'm skeptical that there would be pension/benefits differences.

[fullpampers]

thanks for the comments.

They are actually still legally married. My mother doesn't want to divorce because she doesn't want to cause trouble for my father. There is also the fact that they are better off as is than if they had to sell the house and move separately. So I don't think divorce is being considered.

I'll look into OAS and GIS allowance.

She is living rent free, but that was sort of their deal. It's the classic case where she wanted go back to work after raising me and my sister, and he didn't want her to, saying that he had them covered, and that they had enough money. At one point she went back to work against his will, and that's why she now has a small pension...

I don't think she minds chipping in extra money, but some of it is just stupid aliexpress crap my father buys for no apparent reason and generally not looking at the spending. hopefully he dials it in now that he knows he is overspending.

And if can bring it to where he doesn't over spend, it would leave more money for my mother to put aside, since she is more likely to pay for the house repairs and everything that will come up in future years.

Right now they have the roof to fix and my mother wants to change the windows (the thermos windows are old and fog up inside the panes all winter long) and it's a 30k job all in all. I'll see if I can patch up the roof, and maybe convince my mother to just change the window panes (not the whole frames) where they are no good anymore to cut back on costs.


Thanks
J-S

[Kmp2]

Is your dad's disability from insurance or his CPP?

My mom was just able to take early CPP (@ 62) with no penalties as she meets the disability qualifications.

[mozar]

Well I live in the US, and if you get divorced after 10 years the lower earner is entitled to half of the ex-spouses social security. If they stay married it's up to the benevolence of the separated spouse to give them money.
Living in low cost senior housing and paying her own bills only might be cheaper than living for "free", financially supporting her ex and being responsible for all the repair costs in the house. I really don't see how paying 30k to repair a house is cheaper than living in an apartment.

hopefully he dials it in now that he knows he is overspending.

Maybe I'm getting jaded from reading so many posts like these, but I think it's unlikely he's going to change. Hoping doesn't make something a reality.

[Sojourner]

Well I live in the US, and if you get divorced after 10 years the lower earner is entitled to half of the ex-spouses social security. If they stay married it's up to the benevolence of the separated spouse to give them money.

Not true.  The spouse's benevolence will not matter in either case (in the U.S.).

[former player]

Your parent's don't sound particularly "separated" to me if they are sharing a house and grocery expenses.  Is there a court order?  Are they still filing jointly for taxes?  The idea of "his income" and "her income" don't seem to fit with their current spending patterns.

I agree just change the glazing in the windows rather than the frames as well: get some quotes from local glazing companies for this.  All the advertising from window replacement companies misleads people into the far bigger, and usually unnecessary job of changing frames.  Changing just the double glazed units within existing frames could be one tenth of the price.

[Iplawyer]

Well I live in the US, and if you get divorced after 10 years the lower earner is entitled to half of the ex-spouses social security. If they stay married it's up to the benevolence of the separated spouse to give them money.

Not true.  The spouse's benevolence will not matter in either case (in the U.S.).

Exactly - if you are the spouse - married or not - you just apply and are entitled to 1/2 of your spouse's amount.  Your spouse (or ex-spouse) still gets their whole amount.

[totoro]

One of the requirements for divorce in Canada is living apart for a year. I doubt that's going to fly.

You don't have to live in separate residences to qualify as living separate and apart.  Living separate lives – even while sharing the same house – combined with an intention to end the marriage is sufficient to establish that the two of you have been living “separate and apart.”

As for the OP, are they going to be able to manage to stay in the house long-term?  What is the plan when there are major repairs?  Would it be better to sell up now and have them find an affordable rental either together or separate?