The first reference to the term “sandwich generation” in the Globe and Mail database dates back to 1983. Providing financial support to both your kids and your parents has been a thing for 35 years, yet we hardly talk about it.
Expect that to change in the decades ahead, particularly for the baby boom generation. Boomers, you should revisit your financial plan for retirement if you haven’t considered the possibility that both your adult children and your parents will need your help to cover their living costs.
In a recent retirement planning poll commissioned by the tax and accounting firm BDO, 10 per cent of the almost 1,000 participants said they were financially supporting either children or grandchildren, as well as parents. The phenomenon of parents supporting kids into adulthood is well-documented because it’s so common. In the poll, 74 per cent of participants said they provided this help.
Just 15 per cent of participants said they were providing support to their parents, but this is bound to change as a result of longer life expectancy. As people live longer, there’s a greater chance they’ll need access to health or personal care that isn’t covered by provincial health insurance plans. Some seniors may exhaust their savings and need help from family.
More than two-thirds of participants in the BDO survey have a net worth of more than $1-million, which tells you that supporting kids and parents simultaneously is something that happens at all income levels. Expect to hear more about this in the years ahead. The past 35 years were just a warm-up for the sandwich effect.
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Rob’s personal finance reading list…
Enough with the savings goals no one can meet
A very funny response to an online article from January that says people should have savings equal to two times their annual salary by the time they’re 35. We need achievable goals in personal finance. Overly demanding milestones leave people discouraged and dismissive.
The secrets of Costco
Have to say I’m impressed with how Costco treats employees and does business after reading this. But I won’t shop there. The parking lot at the Costco near me is chaos on wheels. Pass.
There are times when you shouldn’t save for retirement
A financial planner makes a strong case that there are times when other financial needs take precedence over retirement saving.
The joys of home ownership
That’s the sarcastic headline on a blogger’s story about repairing his roof after a windstorm. A lesson on why homeowners need an emergency fund.
Today’s featured financial tool
The Bank of Canada’s next interest rate announcement will be on May 30. Here’s data on what’s happened with the bank’s trendsetting overnight rate since late 2016.
Ask Rob
Q: “What do you think about reverse mortgages?”
A: “My thoughts are summed up in a column I wrote not too long ago. Headline: “Time to get over our squeamishness about reverse mortgages.”
Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length.
In case you missed these Globe and Mail personal finance stories
- How to properly give the cottage to your kids
- Why we shop: The science behind impulse spending
- What BlackRock’s chief investment strategist is predicting for the TSX and loonie for the rest of this year (for Globe Unlimited subscribers)
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Rob Carrick