Sunday, July 8, 2012

Sandwich Generation Financial Considerations

There is a growing population of people who have found themselves caring for their aging parents while supporting their own children. They are called the "sandwich generation". Caught between the often conflicting demands of raising children and caring for aging parents or other relatives causes life for this generation to become increasingly stressful and hectic.

This is a phenomenon that the Canadian Government began to report on as far back as 2002 when Statistics Canada reported that almost 3 in 10 Canadians of those aged 45 to 64 had unmarried children under the age of 25 in the home, or some 712,000 individuals were also caring for a senior. More than 8 in 10 of these sandwiched individuals worked, causing some to reduce or shift their hours or to lose income.

Caring for an elderly person in many cases led to a change in work hours, refusal of a job offer, or a reduction in income. Some 15% of sandwiched workers had to reduce their hours, 20% had to change their schedules and 10% lost income. Also, 4 in 10 sandwiched workers incurred extra expenses such as renting medical equipment or purchasing cell phones.

The effects of providing care increased with time spent. For example, one-half of those spending more than eight hours per month, or the so-called "high-intensity caregivers" had to change their social activities. Over one-third had to change their work schedule. Sandwiched workers were more likely to feel generally stressed. About 70% of them reported stress, compared with about 61% of workers with no childcare or eldercare responsibilities.

In 2002, the Canadian Government estimated that the sandwich generation was likely to grow because of the aging of the baby boomers, lower fertility rates and the delay in family formation. These factors will result in older family members requiring care when children are still part of the household. This is exactly what has happened and TD bank recently reported in fact that our parents are staying alive longer than ever with the average life expectancy in Canada reaching 80 years old.

In addition to supporting their parents, TD reported that more parents are financially supporting adult children. High youth unemployment (currently at 14.7%, almost double the national rate) and increasing post-secondary education costs means many young people are relying financially on their parents until their late 20s. This can translate into higher than expected household expenses, including additional life insurance coverage to mitigate the loss of, or a disruption in, household income, and even an increase in home insurance coverage that may be needed for the extra valuables in the home.

If you are in the sandwich generation strong financial and insurance planning will be key to pulling through with your finances and personal mental health intact. Insurance has come a long way and there are more types of insurance coverage available than ever to help those with aging parents plan for their care. In addition, many of these insurance coverage's will also support your children in the event you suffer a major illness. Long term care insurance, disability insurance, critical illness insurance and life insurance can all be leveraged to plan and prepare for the future. Term insurance is often inexpensive. A good insurance broker can walk you through what is available through all of the insurers, the different rates and coverage's so that you have the right combination of insurance to support your parents and your children.

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