The Sandwich Generation - Managing stress and finances

Key takeaways

To successfully navigate the financial challenges of supporting your parents in the sandwich generation, having a financial strategy is essential.
Canada offers a range of government benefits and programs that should be considered like the Canada Child Benefit (CBB), Old Age Security (OAS), and Employment Insurance caregiving benefits to name a few.
Don’t underestimate the power of community and family support.

Canada, like many developed nations, is facing a growing demographic challenge. An aging population, coupled with increased life expectancy, has led to a rising number of Canadians who find themselves caring for both their children and elderly parents simultaneously, otherwise known as, the sandwich generation.

This dual caregiving role brings unique economic and financial challenges. In this comprehensive guide, we’ll explore the current economic and financial landscape for Canadians in this situation, providing in-depth examples and resources to help navigate these complex and often stressful responsibilities.

Understanding the economic landscape

The demographic shift and its impact

Canada's demographic landscape is undergoing a significant transformation. A substantial proportion of the population is aging, while many Canadians are starting families later in life, leading to a dual caregiving challenge.

Key factors to consider include:

Aging population – Statistics Canada reported that in 2022 | PDF 157.48kBOpens a new website in a new window, approximately 18.8% of the total Canadian population was aged 65 and older, and this number is expected to increase in the coming years.
Delayed parenthood – Many Canadians are having children later, often in their 30s or 40s, which means they are simultaneously caring for young children and aging parents.

The financial strain of dual caregiving

Balancing caregiving responsibilities for children and elderly parents can have profound financial implications. Families may face increased expenses, reduced income, and limited opportunities for career advancement.

Key financial challenges include:

Increased expenses – Families often have higher childcare costs, such as daycare, after-school programs, and extracurricular activities. Plus, they may need to cover expenses related to medical care, home modifications, and assisted living for elderly parents.
Reduced income – Caregivers may need to reduce their working hours or take time off to provide care, resulting in a decrease in income.
Career development constraints – Balancing caregiving with career ambitions can be challenging, potentially leading to missed career opportunities and stagnant income.

Navigating the financial challenges

Comprehensive financial planning

Effectively managing the financial challenges of dual caregiving requires thorough financial planning. This involves assessing your current financial situation, setting clear goals, and developing a strategic plan to achieve them.

“One of the things I can’t stress enough is the importance of having a financial plan,” said Janet Morrow, Financial Advisor, EPC, Trinity Park Wealth Co. “Money is very emotional – especially when you add helping family members into the equation. I often go back to the very basic analogy of ‘make sure you’ve got your own oxygen mask on first,’ so you can maintain your own financial wellness and continue to support loved ones.”

Budgeting – Create a detailed budget that accounts for all household expenses, including caregiving costs. Identify areas where you can reduce expenses or save money.
Emergency fund – Establish an emergency fund to cover unexpected expenses or compensate for lost income due to caregiving responsibilities.
Advisors – Consider seeking guidance from an advisor at Canada Life to develop a tailored financial plan that addresses your unique situation.

Government programs and benefits

Canada offers various government benefits and programs designed to support individuals caring for both children and elderly parents. Understanding and accessing these resources can significantly help reduce financial stress.

Canada Child Benefit (CCB) – The CCB provides financial assistance to eligible families with children under 18, with benefit amounts determined by income and the number of children in the family. Example: A family with 2 children under 18 may receive up to $6,833 annually through the CCB, helping offset childcare expenses.
Old Age Security (OAS) and Guaranteed Income Supplement (GIS) – Seniors aged 65 and older may qualify for OAS and GIS, which offer additional income support for low-income seniors. Example: An elderly parent receiving OAS and GIS may contribute more to household finances, easing the financial burden on their adult child.
Employment Insurance (EI) – Caregivers needing time off work to provide care can access EI caregiving benefits,Opens a new website in a new window providing income support during caregiving leave. Example: An individual caring for an elderly parent recovering from surgery may receive EI caregiving benefits, helping replace lost income.

“There are some government supports in place – like the caregiver benefit through EI that can help for a period of time, said Nahanni Ackroyd, CFP, RIS, Ackroyd Financial Services. But there’s a lot to consider with that – is your employer willing to give you extended time off, do you have children you need to arrange care for? Is there help with travel costs if your parent lives in another part of the country?”

Disability Tax Credit (DTC) and Disability Insurance – If your elderly parent has a disability, they may be eligible for the DTC,Opens a new website in a new window which reduces their tax liability and provides financial relief. Disability insurance can also provide a tax-free monthly income replacement if your elderly parent has stopped working due to illness or an accident. Example: A parent with a disability may receive a tax credit that lowers their overall tax burden, leaving more funds available for caregiving expenses.

Provincial and territorial support

In addition to federal programs, Canada's provinces and territories offer their own support systems for caregivers.

These programs vary regionally but may include:

Home care services – Many provinces provide home care services that can reduce the cost of caring for elderly parents by offering in-home support and assistance with daily activities.
Respite care – Respite care programs offer temporary caregiving relief, allowing caregivers to take breaks and recharge.
Financial assistance – Some provinces offer financial assistance or grants to caregivers to help cover caregiving-related expenses. Example: In Ontario, the Family Caregiver Benefit provides financial support to caregivers providing end-of-life care for loved ones at home.

Employer support

Employers can play a significant role in easing the financial burden of dual caregiving. Many companies offer benefits and programs designed to support employees in these situations:

Flexible work arrangements – Negotiate flexible work arrangements with your employer, such as remote, hybrid, or modified hours, to better balance work and caregiving responsibilities.
Employee Assistance Programs (EAPs) – EAPs often include counseling services and resources for managing stress, which can be particularly helpful for caregivers. Example: An employee experiencing burnout from caregiving can access counseling services through their EAP to address their mental health needs.
Caregiver leave - Inquire about caregiver leave options, which may provide job protection while taking time off to care for a family member.

Financial products and solutions

Life insurance and long-term care insurance – Life insurance and term life insurance policies can help provide financial security for loved ones in the event of your passing, helping ensure their well-being even after you're gone. Long-term care insurance can cover the costs associated with elderly parent care, such as nursing home expenses. Example: Investing in a long-term care insurance policy can help safeguard your savings from being depleted by caregiving costs.
Registered Education Savings Plan (RESP) – RESPs are tax-advantaged savings plans that help you save for your children's post-secondary education. While they may not directly alleviate caregiving expenses, they help your children with financial support for their future education. Example: Starting a RESP early allows you to benefit from government grants and contributions, helping you save effectively for your children's education.
Registered Retirement Savings Plan (RRSP) and tax planning – Proper tax planning and effective utilization of RRSPs can help maximize retirement savings while minimizing tax liabilities. Reducing taxable income can free up more funds for caregiving expenses. Example: Contributing to an RRSP can help lower your taxable income, potentially increasing your eligibility for government benefits and reducing overall tax obligations.
Claiming medical expenses – Claiming eligible medical expenses on your tax return could be a good way to receive a chunk of funds back at year's end.

Community and support networks

Local caregiver support groups – Joining local caregiver support groups provides emotional support, caregiving tips, and connections with individuals facing similar challenges. Example: A caregiver support group in your community can offer valuable advice on navigating the healthcare system and accessing local resources.
Family assistance – Engage other family members who may share caregiving responsibilities, both in terms of time and financial support. Example: Siblings or extended family members can contribute by taking turns caring for elderly parents, reducing the burden on one person.
Respite care services – Leverage respite care services, offering temporary caregiving relief to recharge and attend to personal and financial matters. Example: Respite care can be particularly helpful during periods of heightened caregiving demands, such as when a parent requires intensive medical care.
Charitable organizations – Many charitable organizations and nonprofits offer financial assistance and support services for caregivers. Research local and national organizations that may provide grants, counseling, or resources. Example: The Alzheimer Society of Canada offers resources and support for caregivers of individuals with Alzheimer's disease and other forms of dementia.

Living in a sandwich generation and balancing caregiving responsibilities for both children and elderly parents in Canada can pose significant financial challenges. However, with careful planning and access to the right resources, it’s manageable. Understanding government benefits, leveraging financial products, seeking employer support, and building a strong support network are all essential components of a comprehensive caregiving strategy.

It's important to remember that every caregiving situation is unique, and individual circumstances and needs must be assessed. Seek professional advice when necessary, and don't hesitate to reach out to government agencies, nonprofit organizations, and support groups for assistance.

What's next?

Assess your financial situation. Review your income, expenses, and savings to gain a clear understanding of your financial standing.
Research and explore the various government benefits and programs available to caregivers in Canada.
Consider speaking with an advisor or tax professional that specializes in caregiver financial planning.

This material is for information purposes only and shouldn’t be construed as providing legal or tax advice. Every effort has been made to ensure its accuracy, but errors and omissions are possible. All comments related to taxation are general in nature and are based on current Canadian tax legislation and interpretations for Canadian residents, which are subject to change. For individual circumstances, consult with your tax, legal or accounting professionals. This information is provided by The Canada Life Assurance Company and is current as of date of publication.