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'Sandwich generation' has a smorgasbord of options

An elderly hand holding a baby's foot.

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Erica Cappello and her husband, Christopher D'Cruz, have saved, invested and made some tough choices to build their retirement nest egg. But they face other challenges as they prepare for the day they no longer need to juggle caring for their children and her elderly mother.

Ms. Cappello, a lawyer in Woodbridge, Ont., and Mr. D'Cruz, a chartered accountant, are part of a growing segment of the Canadian population – the so-called sandwich generation, responsible for both their children and aging parents. The couple is not only putting two sons through university but caring for Ms. Cappello's 83-year-old mother, who still lives in her own home but needs help getting about and managing her fixed income.

"My mother is widowed and has had some health issues that required us looking after her," says Ms. Cappello, 51. "She doesn't speak English very well and she doesn't drive."

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Still, Ms. Cappello says she and her husband are luckier than most "sandwichers." They've stuck with their budgets, regularly maxed out their registered retirement savings plans and contributed to registered education savings plans for their sons, for instance, as they pave a path toward retirement.

The sandwich generation evolved because baby boomers' parents are living longer. At the same time, children are either staying at home longer or moving back in with their parents because of job loss or divorce.

Statistics Canada says the number of Canadians older than 45 who are providing for aging parents and other adults, notably grown children, has increased dramatically. About 2.7 million Canadians provided unpaid care to people 65 and older in 2007 (the last year statistics were available), and many of these older caregivers also oversee their own children.

Sandwichers can achieve peace of mind while acting as family go-betweens, but as Ms. Cappello and her husband have shown, that requires foresight and planning.

"It's important to be disciplined about having both a short- and long-term savings plan, and sticking to it in good and bad times," says Tina Tehranchian, a certified financial planner with Assante Capital Management in Richmond Hill, Ont.

"Also, people should try to ensure their parents have their own financial means to take care of themselves in the event their health fails or they need other long-term care. Now we have products to manage those risks, like long-term-care insurance plans that can supplement their other financial resources."

In addition to creating a budget and sticking to it, it's important to have pointed talks with each family member to help make money discussions less emotional, says Phil Brown, manager, client care, with Credit Canada, a credit-counselling outfit that developed a 34-page booklet called "The Sandwich Generation."

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Ask adult children to help out by applying for student loans or other financial aid, working part time, or taking on household chores, for instance.

It's also best to have elderly parents use their own financial resources first, Mr. Brown adds, to reduce the chance sandwichers will have to cash in their own RRSPs or other savings that may result in tax penalties or hinder their own retirement efforts.

"You need to find out what exactly their [elderly parents']financial situation is, including if they may have pensions in other countries, if they're eligible for any type of government support or community programs they can utilize," Mr. Brown adds. "They also need to have all their powers of attorney [health and financial]in place, and all their estate planning in order."

Ms. Cappello says she and her brother have adopted a few low- or no-cost strategies to help their mother. For instance, her brother conducts repairs to their mother's home instead of hiring workers, and she plans to look into a City of Toronto program that helps residents receive free home improvements to reduce their energy use. Ms. Cappello also says people in low-income brackets can apply to the city to have their property taxes capped.

The multitasking mother also warns other sandwichers not to bank on any inheritance, because parents may need to use much of that money to carry them into their old age, including getting nursing and other health care.

Here are financial planning tips for the sandwich generation from Ms. Tehranchian and the Credit Canada booklet:

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Know your finances and stick with a budget: Chart your income and expenses. Stick with the plan, even if you have to forego a new outfit, the latest smartphone or a vacation. Don't feel obligated to pay for everything for everyone.

Buy sufficient insurance: Look into long-term-care insurance for you and your parents. It could help offset costs for nursing care or provide payments if you become critically ill or disabled. Other types of insurance can help reduce the tax implications of inheritances.

Check out community and government aid programs: The Canadian government provides caregivers with help (visit You also may be able to claim the caregiver credit on your tax return. Employment insurance (EI) also provides compassionate care benefits to anyone who has to miss work temporarily to care for or support a gravely ill family member. Provincial and municipal governments also have resources to help seniors. Finally, check whether the companies you work for have compassionate care and caregiver leave plans.

Help elderly parents with estate planning: Ensure parents' powers of attorney are in place so you or someone they trust can help them make decisions regarding their finances and health. Help them create a proper will so there's no confusion about where their assets will go.

Don't baby the kids: Treat grown children like adults. If you can't afford to pay for their education, encourage them to apply for student loans (which come with tax writeoffs) or grants. If adult kids are moving back home, have them contribute to the expenses or help out in other ways. Offer to lend them money interest free, with repayments due when they're established. Help them improve their financial literacy through credit counselling agencies or tools from groups such as the Financial Consumer Agency of Canada (

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