We’ve heard a lot of talk about helicopter parents and boomerang kids, especially as more and more adult children turn to the bank of mom and dad for help as they grapple with poor job prospects and rising housing costs. However, the tables are turning for Canadians families as people over 50 begin to worry more about outliving their savings. It’s a reality that many are facing right now; according to Statistics Canada’s 2011 National Household Survey, 43.1 percent of Canadians were still earning employment income at age 66, and one in five were collecting a paycheque at 75. What’s more, a TD Economics report released earlier this year shows Canadian seniors sinking into debt at a faster rate than the rest of the population.
For kids of indebted seniors, it means they’re about to get caught up in an emerging trend: parents turning to their children for financial support. Take for example this article from Learnvest where the writer confesses she’s afraid to tell her parents how much money she makes. As the 32-year-old admits:
I love my parents dearly and will always be grateful for the love they’ve shown me. That’s why lying to them about how much money I make — and resisting the urge to bail them out of the financial messes they continually find themselves in — is one of the hardest things I’ve ever had to do.
For anyone with parents facing financial hardship, the prospect of providing financial support can be daunting, especially because most young Canadians are struggling to save for their own retirement, not to mention their kids’ education, mortgage costs etc. But it’s equally hard to think of your parents suffering in their efforts to make ends meet.
If your parents are in need of financial support and you’re considering helping them, here are five suggestions to help you decide how — and how much:
1. Don’t just hand over money
Your parents are in a tough spot and your first instinct is to jump in and give them cash right away. But before you step in, take a moment and carefully assess your own financial situation to see what you can actually afford. If you give $200 this month, will you be able to keep doing so? Will you be setting up an expectation for more money in future? If you do end up helping your parents on a regular basis, then come up with a plan that fits in with your financial goals — and one that you can afford.
2. Get help for your parents
If your folks are struggling with mounting debts, encourage them to seek professional help from a financial planner or a credit counseling service. Help with budgeting, debt repayment, and advice on ways to maximize assets could be what’s needed to get them back on their feet.
3. Help them apply for benefits
From Old Age Security to the Canada Pension Plan, your parents should be applying for any and all government benefits for seniors. Service Canada has a full list. Get it here.
4. Consider non-financial help
You might not be able to help your parents out with cash, but you can pitch in and help them with tasks they might have otherwise had to pay someone to do (garden work, shoveling snow, cleaning). You can also help by cooking an extra batch of food at dinnertime and giving it to your parents (it will help them cut down on their grocery costs).
5. Think about letting them move in with you
This is not an easy decision (an understatement I know!), but if you have a big enough home, having your parents live with you will definitely help them out financially and could carry a few benefits for you as well, such as an extra pair of hands around the house or childcare.
Do you help your parents out financially? If so, how are you managing to do it and do you have tips for readers in the same situation? Share in the comments below.
Money expert Caroline Cakebread has been writing for Chatelaine.com since 2006. She is a recovering academic and the mother of two small kids. She lives in Toronto where she writes and reads about all things financial. Follow Caroline at Twitter.com/ccakebread.