With people living longer, many Baby Boomers are turning into financial jugglers –helping to look after the financial needs of their parents, looking after themselves while at the same time having to connect with their children and their financial needs.
According to CIBC estimates, Canadians between the ages of 50 and 75 are set to inherit $750 billion over the next decade, the largest intergenerational wealth transfer in Canadian history. The average Canadian in this age group can expect to receive an inheritance of about $180,000 in the next decade.
There are lots of differences between Boomers and their parents when it comes to their approach to finances.
“Boomers tend to be a lot more open than their parents were when it comes to finances and their plans and wishes,” says Cindy Crean, managing director, private client, with Sun Life Global Investments. “For Boomers dealing with aging parents in their 70s and 80s there are a lot of things they need to be aware of to help them get their affairs in order.”
This can include such things as ensuring your parents have a proper, legal will and a Power of Attorney (POA) for both their property and personal care, reviewing their finances and investments and making sure their financial advisers are addressing their concerns.
The Elder Planning Counsellor (EPC) course, offered by Business Career College in partnership with the Canadian Initiative for Elder Planning Studies (CIEPS), is a designation for advisers to specialize in working with seniors over the age of 55 in a variety of fields including financial planning, insurance, accounting, funeral planning, social work and nursing.
“There are a lot of stresses that come with aging like losing friends, hanging on to your independence, living at home, and mental and physical health,” says Crean. “Financial stress is the last thing they need and having an adviser that understands the needs and stresses of the elderly can bring them a lot of peace of mind.”
On the other end of generation ladder, the Millennials are poised to start inheriting their parent’s money, but again there are some financial differences among the generations.
According to some reports in the United States, Millennials are posed to inherit approximately U.S. $41 trillion from their Baby Boomer parents over the next 40 years, the largest intergenerational wealth transfer in human history.
Boomers, who make up 29 per cent of Canada’s population, want to be financially independent in retirement and seem to be shunning a desire from their children to help keep them comfortable in retirement.
An RBC poll has found that while a majority (72 per cent) of younger Canadians aged 18 to 34 believe they owe it to their parents to keep them comfortable in retirement, a greater majority (76 per cent) of boomers don’t want this IOU and want to be financially independent in retirement, even though they’re not sure how they’ll achieve this goal.
Part of the reason may be due to the fact that boomers believe their children’s generation is facing more financial pressures and is less prepared for retirement, even though 37 per cent of boomers who know what they need to retire comfortably are somewhat short of or nowhere close to where they thought they would be in terms of their retirement savings.
Another study by BMO Financial Group has found that 47 per cent of Millennials are optimistic about their ability to afford retirement compared to only one-third of Boomers.
“Boomers need to have conversations with their children about what they are doing, their plans for their retirement, who is their POA, where their will is kept etc. to show they are prepared should the unexpected happen,” says Crean. “The key is to be proactive. Have the conversations you need to have with your parents and children and have advisers that everyone is comfortable with and who understands your objectives.”
Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.