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Many of the sandwich generation, balancing caring for young children and elderly parents, have witnessed the older generation’s mental and physical decline during the pandemic.
In addition to the immediate risks of COVID-19, limited access to health care, delays in treatment, isolation and loneliness, and pressure from financial market turmoil have all taken their toll.
They’re aging faster because of the pandemic, says Miley Wong, senior wealth advisor and senior portfolio manager at Wong Group at Wellington-Altus Private Wealth Inc. in Vancouver.
“We work with a number of customers in this sandwich generation… and find it often [they] They really struggle to find a sense of stability. In their work and personal life, there are a lot of demands on their time.”
“But also, financially, it can be easy for them to save for retirement while also feeling the need or obligation to help their parents and the stress of their children wanting to be successful and have the ability to [access] a good education or buy their first home.”
Financial advisors can play a key role in helping sandwich generation clients develop a plan to manage additional costs as their parents age.
One of Ms. Wong’s clients had parents who struggled with climbing stairs in the home they had lived in for 30 years. The sale of the house and the purchase of a one-story apartment left a surplus. It is now invested in a portfolio that generates a steady monthly income to pay for parents’ living expenses and additional healthcare costs when needed.
“This has created some comfort for our clients as they now have a sustainable financial plan [and] Parents have more physical safety, too.”
“In the meantime, they can be more free to think about their retirement and also how to support their son in primary school.”
Ms. Wong points out that watching parents’ suffering can prompt the Sandwich generation to better plan for their future – for example – by setting up powers of attorney for themselves or putting in place living-benefit insurance policies while they are still young and healthy enough to get them.
Consultants also have the opportunity to proactively deal with sandwich generation issues with younger clients whose parents have not yet faced age-related challenges. Depending on the situation, it may be worth setting aside some savings to specifically help parents.
“There is a natural desire to support their parents as gratitude for everything their parents sacrificed along the way” – but long-term sustainability is essential, says Ms. Wong.
Clear communication between and within generations is critical
Sustainability is a big part of planning for the sandwich generation, says Natasha Knox, certified financial planner and founder of Alaphia Financial Wellness in Vancouver. Sometimes, people rely on future increases in their incomes or the value of residential real estate to enable them to help with parental expenses – but this kind of “magical thinking” is not the basis for a sustainable plan.
The biggest challenge, she says, is that different generations may have different expectations about how much support children should give their parents, and those expectations may not be articulated with each other.
“There are certain attitudes and beliefs that people may have about what they owe their parents…or parents may feel that their adult children might owe them,” she says. “When things go sideways, they tend to be mismatched with those expectations.”
There can be disagreements within a generation as well, with siblings arguing about what level of support is needed and what is fair and reasonable for everyone to share.
“It’s not just about financial assistance,” Ms Knox stresses. “It helps increase time, guide elderly parents to appointments, communicate with financial institutions, and makes sure their affairs are in order, if they often lose capacity. [managing the consequences] It may fall to one of the children.”
The voltage piece must also be sustainable.
Another complication is that couples do not always agree on the appropriate amount of support for one partner’s parents. Sometimes it is helpful for a partner who wants to contribute more to ensure that any trade-offs only affect individual (non-shared) goals.
Because this is such an important conversation to have, Ms. Knox always asks her clients, “How are your parents? How are their health? Do you have a sense of their financial situation? Is planning to help them something we need to think about?”
Assuming there is a need for planning in this area, the next critical step is to give clients a very clear sense of what they can and cannot afford, because excessive parental support can eventually become a burden on the next generation.
Ms. Knox says most people in the sandwich generation have little desire to put their children in a position to support them in retirement — even if they have to step in to help their parents.
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