Even on the best of days, life can be hectic and overwhelming. Jobs and the general day-to-day aside, many of us have kids to take care of which comes with its own subset of duties and expenses. When you add the responsibility of caring for older family members, it can be a lot to handle. Hopefully it’s comforting to know that you are not alone.
You’re part of a growing number of Canadians who find themselves wedged in the middle of the “Sandwich Generation” – those juggling both the needs of their children and their parents at the very same time. In fact, one in four Canadians currently find themselves in this compromising position.1 “It’s overwhelming trying to manage it all,” says caregiver Catherine Ikeda-Blazys, “I’m maintaining two households.” 2
Serious financial pressure and emotional demands from all corners? Something’s got to give. The good news is, with a little financial planning, you can make the transition into this new phase of your life a little easier and a lot less painful without putting your own retirement plans at risk. Here are a few suggestions to help prepare for the new responsibilities.
1. Organize and update your financial records
First things first, try not to worry about the unforeseeable future, plan for it. You’re likely already managing a massive list of to-dos, but it’s important to make sure you have a lay of the land now, so you don’t get overwhelmed later. Making a list of financial priorities will also help prepare you in case anything urgent comes up, like an unexpected health event or a further decline in your capacity. And be sure to do an annual (or more) review of your list as things continue to change.
Just as you should always put your own oxygen mask on first before helping those around you, the same rings true for your personal finances. That’s why planning is critical. And because you’ll have your hands full with your daily routine, it’s a good idea to get a jump on creating efficiencies now while you still have a little breathing room.
Start by getting a gauge on your own financial landscape. This will help you establish boundaries between what you want to do, what you’re able to do and what you can do, in case anything unexpected pops up along the way. Here are a few questions to ask yourself:
Emergency preparedness – Do you have at least 6 months of living expenses saved in case a crisis arises? No one can predict the future, but we can do our best to at least prepare financially for the unexpected.
Retirement – Are you maximizing your annual contributions? Don’t derail your savings. Continue to make your contributions as planned, even take the time to run a basic retirement calculation to make sure you’re on the right track.
Income/Cash flow – Do you have a handle on your monthly income and general expenses? Once you have an idea of how much you need to make ends meet, you can determine how much is left to help take care of your loved ones.
Future expenses – What kind of expenses do you have on the horizon? Things like college/university tuitions, necessary renovations, cost of living increases. These are the kinds of things you need to factor in to truly see of the road ahead.
Bottom line: it’s important to continue saving and if possible, resist the urge to raid your own retirement nest egg to support others.
2. Understand Your Parents’ Financials
“It does lessen the hardship that my parents don’t require financial support, but it’s still a tremendous amount of pressure,” Ikeda-Blazys says. Once you’ve taken the time to go over your personal finances, it’s time to do the same with your parents. Melanie McDonald, VP and Regional Director of BMO Trust Company adds, “it may feel challenging to have a conversation with your parents about their income and investments but it is a critical first step”. You need to understand where your parents stand financially before they can begin counting on you for care. It goes without saying that seniors can have some tricky financial situations, so make sure you have a good handle on things to avoid any surprises.
Income – Find out exactly how much money they have coming in every month from pensions or any other sources of income, as well as their retirement savings.
Monthly expenses – Make a list of all of their monthly expenses, including health care, bill payments, living costs, insurance, medication, etc.
If they already have estate planning in place, take some time to discuss it with them so you can understand your role (more on that in tip #5).
3. Encourage Adult Children to Contribute
Though it will likely be a difficult subject to broach, urge adult children still living at home to contribute financially as they move closer to independence. There are many different ways to go about it, but the easiest would be to have them start paying for room and board.
If they’re planning on going to college or university, you could encourage them to apply for scholarships, loans or grants. If that’s the route you take however, just be sure to also have the talk with them about the impact of debt, the importance of saving and how to manage their spending.
It’s also a good idea to involve them in your own financial planning so they will not only understand the situation, but they will be better prepared for their own financial trajectory and help you set some boundaries. For example, certain expectations like a car, college/university tuition, home down payment or a wedding may not be realistic for your financial situation. If they understand your limitations, they can have a more realistic view of their own future.
4. Share Financial Responsibilities
While life can seem overwhelming and chaotic at first, turning the tables and getting ahold of it all is easier than you think. The key is to ask for help when you need it. Juggling the financial planning on top of everything else can take a toll and overextending yourself can make it more challenging to meet your responsibilities, including caring for loved ones.
“I can also rely on other family members for assistance and that helps a lot,” Ikeda-Blazys says. Explore the possibility of sharing the caregiving and financial planning responsibilities with siblings or other members of the family if possible. And be sure to set limits – it can help relieve some of the uncertainty about your financial role and encourage others to pitch in when needed.
5. Get Estate Planning in Order
Do you have a will? Do your parents? How can you make sure your kids are taken care of in case the unforeseeable happens? These are all important questions to ask yourself and good reasons to get your estate planning in order sooner than later.
Ensure you have all important documents organized for both your parents and your own family. These include wills, trusts, advanced care arrangements, life insurance, power of attorney and a named executor to carry out important tasks. “We work with clients daily to ensure that estate planning documents are up to date and all pieces work together with a goal of reducing family stress, uncertainty and disputes in the future”, says Melanie McDonald, VP and Regional Director, BMO Trust Company.
Lastly, if you’re concerned about your finances, make an appointment to speak to a financial advisor. They can help get you to a place of confidence, so you feel better about your family’s financial future. Not only will they offer you a second opinion on your current financial plan, they will work with you to develop a new strategy to manage your finances as your goals change.
1https://brighterworld.mcmaster.ca/articles/covid-19s-silver-lining-creating-a-caregiver-friendly-work-culture/
2A huge burden:' Sandwich generation caring for children, aging parents at same time | Financial Post]
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