Family circumstances often change over time. Take the case of Mike and Louise, typical Canadians with two teenaged children who are planning to go to university. Recently, Mike's elderly parents moved in with them after his father suffered a stroke. Both Mike and Louise work full time, and they are finding it increasingly difficult to manage their time and their finances.

Their story is not uncommon. According to Statistics Canada, almost 30% of those aged 45 to 64 with unmarried children under 25 in the home are also caring for a senior. More than three-quarters of them also work outside of the home.

If you're part of the sandwich generation, an integrated financial plan that encompasses your family may better help you meet the needs of three generations. If you think that this situation might lie in your future, understanding the issues will help you adjust your financial plan to minimize the impact.

A new dynamic

Members of the sandwich generation often face unexpected expenses, such as providing financial support for parents. At the same time, your existing financial commitments continue.

Your first step is to discuss and assess the way in which your family circumstances have changed (or will change). For example, what issues are your parents facing and what kind of support will they need? If their physical abilities are deteriorating, they may need your guidance in arranging home care or finding more appropriate accommodations, whether in your home or in a care facility.

Making adjustments

What you uncover in this process with your parents will drive the changes required to your financial plan. Your Financial Advisor can help you determine what adjustments, if any, need to be made in order to accommodate your new priorities.

• Adjusting cash flow. You may now have additional costs for caregiving, or travel expenses to take care of your parents if they live farther away. If your parents have moved in with you, your regular household costs are likely to increase. Your Financial Advisor can help you revise your cash flow to reflect your current situation. For example, you might need to adjust your discretionary spending. Or, you may be able to free up cash by restructuring existing debt, such as your mortgage.
• Borrowing to meet unexpected expenses. If you're facing unexpected expenses, such as renovating your home to accommodate your parents, borrowing may be a more effective solution than tapping into registered assets or selling non-registered investments, which could trigger a tax liability.
• Reviewing your investment portfolio. Given your new circumstances, you may also have different goals and priorities or a different time horizon than you used to. Since these factors are key determinants of your asset allocation strategy, your investment plan may be affected. For example, you may want to adjust your portfolio so that it provides you with easier access to funds.
• Keeping your plan on track. One thing that you don't want to change is your commitment to your own long-term financial security. With a changing family dynamic, you have even more incentive to maintain your contributions to your Registered Retirement Savings Plans (RRSPs) and build your non-registered portfolio for your future use.
• Protecting your family. As your parents become increasingly dependent on you, you may need to adjust your insurance coverage and your estate plan (including your will) so that their care could continue if you should pass away or become ill and unable to work. You can also use this opportunity to think about, or update your own powers of attorney for property and personal care if you were to become unable to make your own decisions.

Helping your parents

To help your parents maintain independence while still making sure that their assets and expenses are managed appropriately, consider the following tactics:

• Suggest that they check their wills and powers of attorney to make sure that their choices for executor, power of attorney and beneficiary designations are current.
• If they haven't already done so, suggest that they itemize all of their investments and consolidate them for easier management and monitoring.
• Help them set up automatic deposits and payments so that they don't have to worry about missing deadlines.
• And finally, remember that one of the most important ways to help your parents, and your children, is to look after yourself. If you're stressed or overwrought, you may be less able to give them the level of care which you want them to have.
• Your CIBC Imperial Service Financial Advisor can provide the advice that you need to adjust to changing circumstances, whether you're caring for your growing children, your aging parents, or both.

CIBC Imperial Service is available in select markets and is most appropriate for individuals with household investable assets of $100,000. CIBC Imperial Service is part of Canadian Imperial Bank of Commerce ("CIBC").

CIBC Imperial Service Advisory is published by CIBC Imperial Service with information that is believed to be accurate at the time of publishing. CIBC and its subsidiaries and affiliates are not liable for any errors or omissions. This newsletter is intended to provide general information and should not be construed as specific legal, lending, insurance or tax advice. Individual circumstances and current events are critical to sound planning; anyone wishing to act on the articles in this newsletter should consult with his or her Financial Advisor.

Banking products and services are provided by CIBC. CIBC Imperial Investor Service is a division of CIBC Investor Services Inc. ("CIBC ISI"), a subsidiary of CIBC, and Member CIPF. CIBC ISI provides investment and brokerage products and services.

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† Canadian Social Trends, Summer 2005, Statistics Canada.

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