The Sandwich Generation and Reverse Mortgages

February 4, 2016 · Print This Article

Those at the tail end of the Baby Boomer generation are becoming known as the “sandwich generation”. “Sandwich” refers to the dual responsibilities of looking after older children at the same time as being the caregiver to aging parents. This squeezes the sandwich generation in two ways – emotionally and financially.

The first half of the sandwich: adult children

When caring for both aging parents and children, something has to give. Fixed costs like those of retirement residences can’t be trimmed, so members of the sandwich generation should look at cutting back on the other half of the sandwich; adult children. While it can hurt to say no to requests for assistance, or to not be able to give extravagantly when your children get married, buy a new house, or have children, you have to consider your own retirement and how your own pennies are being pinched first. Some of our clients do look at reverse mortgages as an option when giving money to adult children, but it should only be considered if your own retirement plan and financial situation is secure. A reverse mortgage can only be taken out by Canadians over the age of 55.

The second half of the sandwich: aging parents

If you’re close enough to your parents, another option is to have them move in with you if they don’t require around-the-clock medical surveillance. Refurbishing your home to accommodate them may be much cheaper than opting for a retirement residence. In this article, Nicole Maliteare was quoted $5,000 per month for a retirement residence in Etobicoke, Ontario; while prices can be cheaper in other areas, you typically won’t find a retirement residence that charges less than $2,000 per month.

If you don’t fit the age criteria for a reverse mortgage, but live close enough to your parents to provide care, consider asking them to look at a reverse mortgage as an option to retrofit their own home to allow them to stay in it longer. Plus, they will likely be eligible for the new Home Accessibility Tax Credit (HATC) if they undertake renovations.

If you are over the age of 55, a reverse mortgage can help you retrofit your home to accommodate aging parents, and you may also be eligible for the HATC once the renovations are complete. Reverse mortgages don’t obligate you to monthly payments and the interest rates are compatible with other forms of credit, such as Home Equity Lines of Credit (HELOCs).

If your parents require round-the-clock medical supervision, a reverse mortgage can help you finance the high cost of a retirement residence if your parents don’t have the funds available, or need some assistance with the cost.

Contact us today to find out more about reverse mortgages and how they can alleviate some of the financial pressure of being a member of the sandwich generation.