A few years ago, one of Lise Andreana’s clients started missing appointments. At first, the Certified Financial Planner® professional didn’t think anything of it, but when she finally visited the elderly woman at home, she quickly realized something was wrong.
“I asked permission to talk to her two daughters, and she couldn’t remember one of their last names,” said Ms. Andreana, who has worked with more than 1,200 clients during her 22 years of experience in the financial field.
The woman was suffering from the early stages of Alzheimer’s. Ms. Andreana quickly began working with her client’s two adult children to plan for the financial implications of their mother’s care.
Today many members of the Baby Boom generation — those born between the years 1946 and 1964 — are facing similar situations: balancing their own finances while caring for both their aging parents and their adult children, who are often struggling to establish themselves.
Like many Certified Financial Planner professionals, Ms. Andreana has been helping her clients deal with this issue more and more over the past five years, and is even living through it with her own family.
“It’s something a lot of people didn’t anticipate, certainly I didn’t when I was starting out my career,” she said.
The issue has reached such prominence that Ms. Andreana enhanced her CFP designation by becoming a Certified Professional Consultant on Aging in 2012, and has even authored a book called Financial Care for Your Aging Parent.
She did this with the knowledge that Canada’s Boomers are unique: highly educated and largely affluent, they find themselves sandwiched between two generations with unforeseen financial issues. Boomers often have parents who are living longer than anticipated lifespans. This longevity, coupled with insufficient savings and low interest rates, has resulted in a generation living longer with less financial security.
Simultaneously, Boomers’ kids are entering adulthood at a time of great economic uncertainty, and contending with skyrocketing costs of education and home ownership.
A recent study conducted for FP Canada by Leger, The Research Intelligence Group, found that Canadians in households with children under the age of 18 feel significantly more pressure than those without.
So how can Boomers plan through the financial squeeze of providing for children and aging parents? What financial planning considerations are necessary for Boomers to protect themselves while helping care for their family members?
Ms. Andreana advises her clients to approach this squeeze the way travelers are trained to deal with an emergency on an airplane: by putting your own oxygen mask on first.
“You have to protect yourself,” she said. “You can’t take care of other people if you’re not taken care of.”
First, she advises people to figure out their own financial number for retirement security – the amount they will need to live comfortably after they stop working – and then build in a contingency cushion of 20-30 per cent.
From there, families should initiate a cross-generational conversation to establish an honest assessment of everyone’s financial realities, as well as their priorities, requirements and expectations.
When Ms. Andreana engages in this process with her clients, she often finds that clients have overcommitted to their children or parents in a way that is jeopardizing their own financial security.
Many Boomers are borrowing against their retirement savings to help fund down payments on their children’s homes or to finance their wedding plans, lump sum payments Ms. Andreana cautions against.
When it comes to caring for aging parents, the biggest risk most families face is a loss of income associated with taking on the burden of care. Many people reduce their own work hours to look after parents who are experiencing deteriorating physical or mental health.
Ms. Andreana believes that one option is for families to keep working and hire professional caregivers, reducing the emotional and financial strain on their own lives.
And while it’s emotionally difficult, she believes families need to look at all options – including the possibility of selling their parents’ home and moving them into a long-term care facility.
Ms. Andreana encountered this when she argued for professional care for her own mother, battling her siblings’ understandable emotional reservations. In the long run, Ms. Andreana said, the cost of care is lower in a long-term care facility and adult children can use the value of the house to pay for the care, while providing the best care, by those who are uniquely suited to contend with every stage of an aging individual’s decline.
Ms. Andreana said that establishing a relationship with a Certified Financial Planner® professional is also a “huge” asset when it comes to addressing the generational squeeze. Outside advice can help families establish a concrete plan of action while also defusing tension between family members by offering an impartial, outside opinion.
Template savings programs are ineffective, she believes, because people’s financial situations are as unique as their individual families, and plans must be tailored to people’s specific needs, priorities and assets.
“It takes a lot of work to figure out the best way through this kind of pressure,” she said. “You need someone who will look at every piece of the puzzle.”
To find a CFP professional in your area that will help guide you financially, use our Find Your Planner tool.
For the latest financial planning advice delivered right to your mailbox, sign up for our free newsletter, Here's the Plan™.