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Canadian Sandwich Generation Feeling the Squeeze

By Melissa Cassar

Are you financially squeezed by caring for both your children and aging parents? If so, you're part of the so-called 'Sandwich Generation'.

Given today's challenging financial climate, let's take a look at how members of the Sandwich Generation – many of whom are Baby Boomers – are faring.

New survey data from Credit Canada and Capital One reveals the vast majority (82 percent) of Sandwich Generation Canadians are either not prepared, or don't know if they would be, to support their aging parents if the need were to arise.

Two-thirds of these financially squeezed Canadians are accumulating debt to care for both younger and older generations, and more than half (55 percent) are concerned that supporting their parents will impact their own retirement plans.

In terms of cost, the government of Manitoba estimates the average middle-income family spends about $160,000 raising a child until age 18, and the recent survey estimates that one-third of Canadians provide more than $500 every month to support their parents. Retired parents – who are likely on a fixed income – might not be as financially prepared as you think.

Finances can be a sensitive subject, so bring it up with your parents before there is a care-giving crisis. This 'role reversal' may be uncomfortable, but it's better to have the discussion now – before your parents become financially pinched. Taking stock of your parents' complete financial picture can involve more than assessing income, expenses, savings and debts. For instance, has a Power of Attorney been established so financial matters can be handled in the case of a disability?

Looking to the younger generation, a recent Visa survey showed that only approximately one-third of Canadian students aged 12 – 18 are learning money management skills at school. So, encourage your kids to budget at home by providing them with a consistent level of financial support that suits their stage of life. With a finite amount of resources to work with, they'll learn money habits at an early age. As a bonus, a steady amount of financial support will avoid the tiresome dynamic of providing ad hoc 'handouts' whenever your son or daughter is heading out to socialize or make a purchase.

Be aware that lifestyle changes might be needed to suit the family's collective, financial well-being. For instance, it might be necessary for your parents to move into a smaller home, or even move in with you. For those in the 'Club Sandwich' category – meaning you're also caring for grandchildren or grandparents – leveraging all the information, resources and tips at your disposal will be particularly important.

To support Credit Canada's Credit Education Week, which runs November 14 to 18, Visa has provided the following advice for members of the Sandwich Generation who are feeling financially squeezed:

Top 10 Tips for the Sandwich Generation

  1. Claim the caregiver tax credit if your parents live with you, and are over 65.
  2. Teach your children money management skills, so they become financially independent sooner.
  3. Take inventory of your parents' financial situation before there is a care-giving crisis.
  4. Remind your parents to apply for Old Age Security at age 65, or age 60 for those with low incomes.
  5. Consider long-term care insurance for seniors. The earlier it's purchased, the less expensive it will be.
  6. Help your kids with resumes and job-searching, so they can land their first job.
  7. Ask your parents to establish a Power of Attorney, so financial matters can be handled in the case of disability.
  8. Suggest a reverse annuity mortgage to your parents, if they are living mortgage-free but have limited income.
  9. Communicate your dual care-giving role to your employer, who may accommodate your situation with a flexible work schedule.
  10. Talk to your parents about downsizing their home, or consider shared accommodation.

Throughout the process of being a dual-generation care-giver, it can be challenging to prioritize everyone's financial needs – including your own. If possible, avoid dipping into your own savings to support those around you.

Caring for both children and parents can also be emotionally challenging. By setting aside time for yourself – and perhaps your partner – to rest and rejuvenate, you'll be able to help loved ones who are counting on you.

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This article is intended to provide general information and should not be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.

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