Supersizing the sandwich generation | Inheritance | Retirement ...

About one-quarter of the so-called sandwich generation already has a second slice on top since they care for two or more seniors.

Balancing the demands of family life for today?s parents can be difficult at the best of times. Times are even tougher for many a parent suddenly tasked with the responsibility of caring for their own parents as well. These people make up the sandwich generation ? those raising their children and simultaneously looking after their parents.

But today?s changing demographics ? many of them highlighted in census data released recently by Statistics Canada ? are resulting in a sort of super-sizing of the sandwich generation.

There are incentives to consider the option of moving Mom and Dad into your home or moving your family into their home

The increase in rates of senior or ?grey? divorce means higher odds of caring for divorced parents and maybe even their new partners. As if caring for your married parents isn?t tough enough, we might see a generation of Baby Boomers providing elder care for parents in multiple locations.

About one-quarter of the so-called sandwich generation already has a second slice on top since they care for two or more seniors.

The trend towards having children at a later age also puts more people in the position of having to care for both children and parents. And since people are simply having fewer children period, there are less children to care for the growing ranks of the elderly.

The term ?sandwich generation? was coined by American social worker Dorothy Miller in 1981. A generation later, more than one-quarter of today?s Canadians aged 45-64 have children living with them and also perform some sort of elder care.

Since eight out of 10 in the sandwich generation are also working, it?s not surprising to see more and more retirement homes and nursing care options becoming available to provide the care they may not have the time to provide themselves. In some cases, it?s just not an option for the elderly to live on their own. That said, not all seniors have the resources to afford these facilities ? nor do all of their children.

Beyond the stress of physically caring for parents comes the stress of caring for their money

Statistics Canada reports the number of seniors living with relatives or non-relatives in a private dwelling increased from 285,370 to 393,150 from 2001 to 2011.

There are incentives to consider the option of moving Mom and Dad into your home or moving your family into their home. Selling your parents? home or your home could provide funds to use towards their care. It could also reduce the commuting costs of going back and forth from your home to theirs, since they are not likely to live close by.

And given that Statistics Canada reports that 15% of sandwiched workers have to reduce their work hours, having your parents in your home could mean more time to get the job done ? both your day job and your night job. After all, there are only so many hours in the day.

Beyond the stress of physically caring for parents comes the stress of caring for their money. And practically speaking, there are typically two different problems when it comes to Mom and Dad?s money ? they either have too little or too much.

Too little means they might become a financial burden on you. And if you have siblings, deciding how to split the cost of care can be a delicate subject. Should the cost be split equally? Should the oldest child step to the plate? Should the wealthiest child bear more of the burden? Or the one who makes more money? Or the one who got more financial support from their parents over the years?

Having too much money, while seemingly less of a problem, isn?t always so. One child may want to keep the funds intact in their parents? names, while others might push for an early advance of their inheritance. Beyond that, it?s common to see situations where strategies to move money from one generation to the next or to reduce taxes or probate defeat the original intention or lead to significant costs ? both financially and on family ties ? ranging from mistakes to disagreements to litigation.

The good news on the tax front is that the Canada Revenue Agency provides incentives to Canadians who are caring for elders. It?s possible a senior (or anyone, for that matter) may qualify for a tax credit called the ?disability amount? if they suffer from prolonged symptoms that inhibit their performance of the activities of daily living. Nursing home and caregiver costs may be claimed as medical expenses for another tax credit. And beyond that, there are additional tax credits for ?infirm dependents? as well as ?caregivers? depending on whether or not a senior lives with you or depends on you financially for support.

Having three generations under one roof is more common elsewhere in the world, but perhaps less so here in North America ? right now. One problem with this option is that it could raise an interesting dilemma ? that is, what if you take in your divorced parent and subsequently need to provide care to your other parent? Or maybe your parent has remarried and they require help as a couple? What if your parent passes away and their spouse still requires assistance? Maybe you inherit the house that the spouse is living in?

Odds are moving more in favour of being presented with such situation and Baby Boomers have some decisions to make in the not-so-distant future to ensure they can digest the double-decker sandwich they could soon be served.

Jason Heath is a fee-only Certified Financial Planner and income tax professional for Objective Financial Partners Inc. in Toronto.

Source: http://business.financialpost.com/2012/09/29/supersizing-the-sandwich-generation/

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