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Retirement Living with grandma and grandpa: One family’s retirement plan

Raj and Nira Rajaratnam grew up with elderly relatives living in their homes in north Sri Lanka. The tradition is so thoroughly ingrained in their Tamil culture that they always expected their own parents would live with them during their older years.

Fourteen years ago, after an arduous search, they moved their young family into a detached home in a middle-class north Toronto neighbourhood containing a separate apartment for Mrs. Rajaratnam's parents.

Although living with grandparents is not the scenario most Canadians envisage when they look to their golden years, the Rajaratnams, who fled Sri Lanka in the late 1980s, have so far turned it into a financial positive, enabling them not only to advance their own careers by having built-in child care but also to plan for a comfortable retirement and launch ambitious investments.

When the couple’s two sons were born, the grandmother, Mahes, 76, and grandfather, Mathi Muthulingam, 83, were the children’s care providers and, as former teachers, their tutors. That left the parents free from daycare costs and deliveries – and even making dinner – to concentrate on their jobs.

Both parents ascribe their career success to the ability to work longer, uninterrupted hours. “I didn’t have to worry about leaving early or coming home late,” Mrs. Rajaratnam says.

A 2002 Statistics Canada report chronicles the challenges parents face when being squeezed between care for older and younger generations. It cites an increase in stress, health problems and employment disruptions as concerns at home pull people away from the office. Yet the Rajaratnams, both 48, have found their extended family network has brought everyone financial and domestic benefits.

Vikas Saida, a financial adviser with Raymond James in Mississauga, counts many first-generation Canadians among his clients living with elderly parents.

Avoiding daycare is just one of the many benefits, Mr. Saida says: “The savings are quite substantial. Daycare can cost anywhere from $1,000 to $1,800 a month. Who else is better to raise kids than family? That’s what I believe.”

The Rajaratnams are returning the favour today by providing the grandparents with a home and support as they age. Their sandwich situation has a significant twist, because their parents are essentially dependent on relatives for financial support as they age.

Seniors can often sell their homes or use pensions to offset costs in old age. Mrs. Rajaratnam’s parents, however, came to Canada with no assets and have only limited Old Age Security and Canada Pension Plan payments as income.

Looking to retire and travel the world when they hit 60, the Rajaratnams must begin to factor in the costs of providing care for the grandparents, including the possibility of steep health care costs as they age, while also supporting their children as they step out into the world.

The Rajaratnams have defined pensions awaiting them, but Mr. Rajaratnam wanted additional security for his extended family.

The couple set to work, intensively researching Florida real estate in the wake of the crash in 2009. Using mortgage room from their Toronto home, they bought two condos when the Canadian dollar was near par. The nest egg has gained 20 per cent in seven years and has aided their ultimate plan to retire early.

The $1,000 (U.S.) monthly net income from the rental properties goes to their $2,200 (Canadian) monthly mortgage, which they plan to pay off by the time they retire. With financial planning, their pensions and investments should bring them enough security to care for the grandparents as they age.

Mr. Saida says more clients need to include the anticipated costs of caring for aging parents when looking ahead to their own retirement.

“The [adult] kids need to plan for any physical or mental disability or any challenges that their parents might face five, 10, 15 years down the road and plan for those eventualities so it doesn’t come like a thunderbolt from the sky that drains their retirement savings,” he says.

“We have seen in a lot of the cases the financial stress has become so high that the parents have moved back to the home country where they came from.”

The Rajaratnams’ well-ordered financial plans stand in contrast to the way they came together: The marriage was arranged by relatives who compared the astrological birth charts of the bride and groom in the traditional Hindu fashion. Ironically, they grew up in nearby towns but never met until they came to Canada.

Their careers as chartered professional accountants and financial analysts have flourished, with Mr. Rajaratnam working for the Ontario government and Mrs. Rajaratnam for the University of Toronto. They are proud to be self-made, with a combined income of about $200,000.

“When we started life here, we started at zero,” Mr. Rajaratnam says.

The family is now thriving in Toronto’s diversity of cultures. Sons Keirthi, 16, and Gowtham, 14, are devoted hockey players. The family spends spare time in arenas in North York, and the couple volunteer as team managers. They ski and take vacations in Northern Ontario but also buy Indian groceries and enjoy traditional Tamil cultural events.

Their home exemplifies the holistic family commitment. They found a house in 2002 for $500,000 with a self-sufficient side-split apartment allowing the family to live together but also letting everyone retreat to their own areas.

Three generations living in the same home and a wide cultural gap between the boys and their grandparents may raise concerns about stress or privacy but the arrangement is so natural, family life runs smoothly. Any concerns simply haven’t crossed their minds.

“That’s a cultural thing. We are brought up that way,” Mrs. Rajaratnam says.

All photos by Michelle Siu for The Globe and Mail


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