The Sandwich Generation Squish
Written by Kelley Keehn
Thursday, February 11th, 2021
Are you part of the Sandwich Generation?
If you're someone who's supporting both your children and your parents, then you're part of this group. This term usually refers to people in their 30s and 40s, but more and more people are starting to fit in this sandwich.
As parents age and are living longer, they may not have saved enough for those extra golden years. Adult children may also be taking extended withdrawals from the bank of mom and dad. If you're in the middle of all this, you're likely feeling financially squished.
Putting Financial Goals on Hold
According to a survey by FP Canada and Chartwell Retirement Residences, one in four "Sandwich Generation" Canadians expect to put their own financial goals on hold as a result of providing financial assistance to both their children and their parents.
- 30% who have children and at least one living parent, say they expect that they will need to provide financial assistance to both their children and parent(s) in the future.
- Women (35%) are more likely than men (22%) to say they will need to provide financial assistance to both their children and parent(s).
Talk to Your Loved Ones About Your Financial Situation
"Even though Canadians are worried about the future, many tend to avoid having important financial conversations with their family members," says Sharon Henderson, Vice President of Marketing and Communications with Chartwell Retirement Residences.
It's especially hard to have the money talk with your parents. This is a taboo for many people, but you want to open up the lines of communication before a medical urgency requires a major decision like moving to a long-term care facility or residence.
"Many of our clients face decisions that make them decide – is it time for Mom to move into a home, or can we look after her best here?" says Shawn Todd, fee-only Certified Financial Planner with Ecivda Financial Planning Boutique. "It can be difficult to plan on an event like this."
Are You Missing Out on Tax Credits and Assistance Programs?
The survey also revealed that less than half of Canadians (47%) are familiar with any of the tax credits and financial assistance programs that are available to help them support their adult children and aging parents, including those related to post-secondary costs and home renovations to accommodate seniors.
Considerations for Aging Parents:
- Eligible Dependent Tax Credit: For single adults (not claiming the spouse/common-law partner credit) responsible for financial care of a relative
- Canada Caregiver Credit: If providing support to a mentally or physically incapacitated parent or grandparent
- Disability Tax Credit: Some parents who are in poor health may meet the eligibility for this credit
- Attendant Care or Care in a Facility: Some nursing care costs may be eligible
Considerations for Raising Children:
- RESPs – for education savings (56% of parents are not taking advantage of the savings grant offered)
- In-Trust Accounts – for savings for children's non-educational expenses such as cars and weddings
- Claiming childcare expenses
- Filing taxes - Lower-income families may be eligible for Canada Learning Bond, and Canada Education Savings Grant (CESG)
- Eligible Tuition Fees
- Student Loans - Claiming a tax credit for interest paid on a student loan
- Trusts - in the case of adult children who are not financially independent or responsible, parents may want to consider using family trusts for wealth distribution at death as a control measure
- Canada child benefit (CCB)
Don't Feel Sandwiched!
Take time to explore these tax breaks and benefits. If you're considered eligible, it may help ease the financial pressure of supporting both your kids and your parents.