Baby Boomers’ daughters doing heavy financial lifting

It's been said man works from sun to sun but a woman's work is never done. In light of a recent Ameriprise Financial report concerning the daughters of the Baby Boomer generation, truer words may not have been spoken.

The Ameriprise report, dubbed "Money Across Generations II", states the daughters of Boomers are increasingly providing financial support to ageing parents. That in-turn puts additional pressure on women's retirement security considering they're already compromised (generally speaking) due to reduced earning if they have children, the gender pay gap, and on average they have a longer life span than men do.

Among the report's findings, not only are women inclined to be more informed about their parents' financial situation, the number of women supporting their boomer parents has increased dramatically in the last five years. Two-thirds (67 per cent) of Boomers' daughters say they are providing some form of support to their parents, a substantial increase since 2007 when 48 per cent reported doing so.

Though the report focuses on challenges facing American women, no doubt Canadian women face similar financial burdens. But Patricia Domingo, investment and retirement planner, RBC in Toronto, says she's not seeing a similar pattern amongst her female clients.

"I don't see a whole lot of children having to take of Baby Boomer parents. Even the oldest Boomer parents, about 66 approximately, they're generally not needing too much physical care yet and from a financial perspective I don't see that too often," she remarks.

"That's not to say I don't see it at all, just not as often. Certainly what I have seen with families if they have to take care of parents, it's generally a time issue and that does take away from their (earning) time."

Usually, if ageing Boomers need some form of assistance it's in circumstances related to moving into a retirement home or into their children's home.

"If Boomers sell their home, typically there are assets there to help provide that income. That's not to say the children don't have to contribute. But usually, the parents I've seen have assets or some form of income," she adds.

Of note in the 22^nd Annual RBC RRSP Poll, females are less likely to have a retirement plan in place than men (81 per cent) and only 36 per cent of Canadians believe their financial dependents will be their ageing parents or in-laws.

Similarly, Tina Di Vito, head of the BMO Retirement Institute in Toronto, found the Ameriprise Financial report interesting since a lot of Boomers are in their mid- to late-40s.

"We looked at the Baby Boomer generation and their issues because it's their parents that are ageing. So a 50- to 60-year-old Boomer has a 70- or 80-year-old parent and the likelihood of them supporting those individuals is extremely high," she says. "More so for women since women tend to take a primary role in family caregiving. Women tend to have stronger social networks than men do and as a result they do talk more about personal matters like healthcare."

Duty of care falls to women

Cynthia Caskey, vice-president, portfolio and sales manager, TD Waterhouse Private Investment Advice, agrees Canadian women face challenges as it pertains to income and caring for elders.

"As elderly parents become frail and need help it's often the daughter or daughter-in-law that steps in to help. And on average, women drop out of the workforce for 13 years between taking care of children and/or ageing parents," she says. "Ninety per cent of women are the major caregivers for family … this impacts between 10 per cent to 25 per cent of women and they're leaving the workforce to provide elder care at the average age of 52."

Caskey adds when women do drop out of the workforce to care for a family member, they're spending an average of 25 hours per week doing so.

"Elder care isn't only affecting women's earnings, but it may cause them to dip into their own savings if their parents' savings run short or if illness strikes," she says. "To protect your own savings you need to have in-depth conversations and particularly for women, it's crucial to know how prepared your parents are to handle any financial hardships and to ask how they want to be cared for."

In Canada, it's more common for parents or retirees to be providing financial aid to their adult children than what's unfolding stateside.

"We're seeing the younger generation staying in school longer and getting multiple degrees as they're having difficulty finding a job and homes are very expensive in this country," Di Vito continues. "The other big trend in Canada is grandparents are becoming primary caregivers for their grandchildren. It's becoming a common situation."

Ensuring retirement security

For women and men, RBC's Domingo recommends thinking ahead with respect to their own retirement and in providing their children with a financial education.

"What I always say to clients is you have to be careful. Yes, you want to leave that legacy and help your children but if you can't take care of yourself, down the road you may very well have to go back to your children for help," she says.

"Financial education is one way to help this situation. You can't help it if your children can't get a job but certainly you can teach them how to manage their money. It is becoming more difficult for young adults (to buy a home or build retirement savings)."

BMO's Di Vito has similar advice for families.

"A lot of financial planning in the past has centred around the individual. These days … financial planning has to take more of a family approach," she advises. "It's important for men and women; the topic of money and inheritances historically have been taboo. It's very important for families to have open and honest discussions about finances."