Some of us are here in the so-called “sandwich generation”. We have kids to raise and we have our aging parents also to consider. It can be a challenging time for many of us. How do we handle both while trying to not feel overwhelmed and still give ourselves some time? It’s not easy. In Ontario, 29 percent of the provincial population (3.3 million) currently provide support and care to a chronically ill, disabled, or aging family member, friend or neighbour. Nationally, eight million Canadians are unpaid caregivers for family, a role most often taken on by women (54%) who shoulder the burden.
The financial responsibility for caregiving of aging parents also falls to their adult children, who must juggle the needs of their parents while simultaneously raising and supporting their own families.
With the stress-bearing sandwich generation on the rise, how can Canadians effectively plan for the foreseeable (and unforeseeable) emotional and financial demands of future caregiving? Families that plan for these “Plan B” health events will significantly reduce stress and strain on all family members, and all family finances.
Nancie Taylor, Senior Wealth Advisor, Meridian knows about the unexpected but inevitable: ‘Planning for Plan B’. How do families talk about the aging process through to ensure that generations can age well and be provisioned for? Nancie knows first-hand through her own personal experience as she is helping to care for her mother while raising a teenage son.
We checked in with Nancie to gain more insight so we can be better prepared ourselves…
What’s different between our generation and the one previous to ours when it comes to financial responsibility?
For one, we’re living longer. That’s great, but it has its challenges. Research tells us that almost three-quarters of parents feel that one of their children will assume long-term caregiver responsibilities if needed. And nearly one-quarter of adult children expect to financially support their parents. These children must juggle the needs of a parent while simultaneously raising and supporting their own families.
I have personal experience, with a son in university and an ailing elderly mother. So I know what it’s like to be caught in the middle. My brother has been a caregiver for my mom as he lives locally to her but has a busy company with young children at home and caring for his father-in-law. My sister who is my mom’s Power of Attorney has spent many hours attending to her financial and health care concerns while running her family and travelling back and forth from southern to northern Ontario.
We cannot control everything in our health but we can control taking steps today to ensure our aging well plan is communicated and in place for when the time comes for us or a loved one.
What does “aging well” mean to you?
The secret to aging well is finding contentment and living life to the fullest – however you define it. That covers things keeping your body and brain active, finding what engages you and having rewarding social relationships. It’s about the things that give us meaning and joy, and the ability and means to do them.
So there’s a financial component to aging well, but it’s also about your physical or psychological health. And nobody knows what that will be. Plan A might be to continue doing what you love, with the same level of capabilities. But life interferes. We have to be ready for plan B. To age well, you have to plan broadly.
The costs associated with taking care of our parents can be a real shock. What should we be getting ready for?
Right now, eight million Canadians are unpaid caregivers. In Ontario, 29% of the population provides support and care to a chronically ill, disabled, or aging family member, friend or neighbour. That requires time and often out-of-pocket expenses.
Getting ready for what might happen as people age really starts with conversations. A big decision is location. Will people be staying in their existing home or relocating? If staying in place, does the home need to be upgraded or renovated to accommodate evolving needs? If relocating, where? How much will that cost?
And if people need care or other supports as they age, in or outside the home, who is providing it? Paying for it? Those are all financial and lifestyle issues.
Other conversations relate to the overall plans and the impacts on the family. If help is needed, can other family members provide it? Who? Where are they? If they’re not in the same community, how can family members help from a distance? What are the home and community resources, for long-term care or eldercare?
You can revisit all of these questions over time because circumstances change. Fear or uneasiness can often prevent these conversations. But just having them, and clarifying plans and expectations, will significantly reduce stress and strain on family members and family finances.
What is one thing that catches people off-guard?
Not everything is inevitable, but nothing associated with aging should surprise us. Things change. Eventually, a health event will happen – we don’t know what or when, but we know something will occur, which can have a long-term financial impact.
Even with those unknowns, we can avoid a lot of issues by having open family conversations about the aging process and finances. It’s important to start those conversations early, before you’re perhaps in the midst of having to make urgent decisions.
What can also surprise people are the disagreements or assumptions. Many families aren’t on the same page when it comes to the role that different members will play and contributions they’ll make, whether in time or money. There are disagreements too about the right time to talk about finances. So that’s another reason to start early.
Another thing that can surprise people is the range of financial impacts on the extended family and the mushrooming impacts.
Consider a scenario where Mr. Smith had a stroke, and Mrs. Smith can’t take care of him on her own. So now they need to pay for home care, and they hadn’t set aside enough for that or obtained the insurance that could cover it. That can also affect their ability to stay in the home long term, which was their plan. Mr. Smith was still doing some work, so they have to deal with that lost income. Meanwhile, the Smiths’ adult daughter, a single mother, is enlisted to help ease the burden on mom. The time required starts to chip away at her own attendance and performance at work. She can’t afford the added child care. And she’s getting burned out. So she moves in with her parents, and the tension in the house increases.
Statistics Canada reports that of the country’s informal and unpaid family caregivers, 43% missed work, 15% had to reduce their work hours and 10% had to give up an opportunity like a promotion or new job.
These are things that worry a great many Canadians. A recent survey from Leger found that 14% of people with a living parent expect to postpone their own retirement to financially care for that parent. And 12% said that supporting their parents would dip into their savings and keep them from paying off their own debt.
The whole family can be affected, which only reinforces the need to have a family and financial plan, and a backup plan.
Our parents’ generation believes in leaving an inheritance but we’d rather them use the money to live comfortably while they are here with us still. Is that a good idea?
With people living longer, retirements are also much longer than in the past. And that period can even start earlier than expected. Approximately one-third of Canadians retire earlier than planned. Some are financially able to, and that’s one of the top three reasons, but the other two reasons are health issues and being downsized at work.
People have to take care of funding their retirement needs first, and for longer than ever. That said, financial planning will look at how to balance all needs and desires, which can, of course, include what you might want to leave for beneficiaries.
Great advice especially if we want also to balance our dreams of travelling, for example, on top of the unexpected. What else should we be chatting about with our older family members now to prepare for the future?
There are fiscal and physical considerations. On the financial side, families should talk about assets, investments, wills, estate plans and living arrangements. It’s equally important to discuss things like advance care, living wills and end-of-life plans. Health and money are difficult but necessary topics to hash out.
How can a Financial Advisor help?
Families require plans to ensure the financial resources to both meet goals, and fund possible needs down the road. That can come from a mix of savings, sources of additional income, insurance and the like.
It can also be useful to sit down with the family, and have a talk with the next generation too. An advisor can help to facilitate a family conversation about cash flow, expenses, appropriate portfolios for each stage, and the right financial instruments and strategies. Advisors will work with you to envision and plan for a range of eventualities. So that you can age happy and age well.
Thanks Nancie! Lots to think about and plan. We appreciate this advice. You can find Nancie Taylor, Senior Wealth Advisor at Meridian here.