Sandwich Generation: Financial Survival Tips

The so-called “Sandwich Generation” finds itself in a unique and challenging situation as its members balance providing financial support to both aging parents and children while managing their own financial goals.

The pressures this generation faces can lead to personal and financial stress, resulting in less retirement savings, difficulty paying the bills, or overwork as they are forced to take on second jobs to make ends meet.

Below I provide some practical tips to help those of this generation who may be feeling stuck or unable to move forward with their personal financial goals.

What is the sandwich generation?

According to Corinne Rusch-Drutz, director of the Toronto-based Kensington Health Foundation, the sandwich generation is made up of people who care for children under 15 as well as aging or sick parents.

However, this could also be extended to parents with adult children living in the home who are seeking to balance the accommodation and feeding of their working-age adult children while also trying to financially support aging parents.

Who is most likely to belong to the sandwich generation?

A recent report from Statistics Canada found that people aged 35 to 44 are most likely to work as sandwich handlers, followed by those aged 45 to 54.

People in their late 30s and early 40s are most likely to have teenagers or adult children living in the home and parents older than 65.

Thanks to advances in medicine and health technology, many people over 60 are still healthy and working. This is one of the reasons why the average retirement age has increased from 60 to 65 over the last two decades.

However, seniors who still have part-time jobs may also need financial support or physical assistance on a regular basis, which can result in sandwich caregivers being distracted from their full-time careers and employment.

Even seniors who work part-time may occasionally need financial or physical support. This can result in sandwich caregivers giving up their full-time job or career to provide the necessary help.

Challenges for the sandwich generation

For many, home care means higher costs of living, limited retirement savings and a constant tug of war between work and family commitments.

Of those surveyed by Statistics Canada, 86 per cent of sandwich attendants said their position had impacted their overall health and well-being. The most common challenges faced by this generation include:

● Difficulty saving for retirement due to increased financial obligations

● Personal stress due to balancing personal and professional life

● Burnout due to overload or balancing multiple tasks

● Less personal time for hobbies, health or relaxation

Practical financial survival tips for the sandwich generation

Do you feel like you’re burning the candle at both ends? Here are some practical tips sandwich caregivers can use to regain some financial control and peace in their lives.

1. Encourage your children living with you to contribute to the bills

If your middle school teenager is old enough to work, encourage him to take a summer or weekend job so he can take care of his personal expenses or needs. Not only will this give them valuable life experience and learn how to manage their money, but you won’t have to foot the bill for their weekend activities.

If your household has an adult child over the age of 18 who is not a full-time student, you should encourage them to help pay some of the household bills. That means charging them a few hundred dollars a month for their room or asking them to contribute towards food, electricity, water or internet bills.

2. Find out about government benefits and tax credits

Government tax credits and benefits can also be a great way to put extra money in your pocket. For example, parents who care for children can receive the Canada Child Benefit. Those caring for aging or sick parents may also be eligible for the Canada Caregiver Credit.

3. Buy groceries in bulk for the whole family

When purchasing groceries for your children, yourself, and aging parents, consider buying groceries in bulk from grocery wholesalers to save costs. Once you get the food home, divide it up and ask for donations.

4. Prioritize your retirement savings

Don’t let guilt convince you to prioritize your own retirement savings. At the end of the day, you are the only person capable of taking care of yourself.

Even though you may give a little more to your children or parents, make sure your retirement savings are still a priority. One day you will no longer be able to work and will need to rely on these savings to pay your bills and support your personal needs.

5. Reduce your living expenses

This goes along with the previous tip about prioritizing retirement planning. If you need to reduce spending in one area of ​​your life, it shouldn’t be the amount you save for retirement. Instead, you should increase your pension contributions and reduce your living expenses.

That could mean:

• Trade in your vehicle for a cheaper/more reliable one
• Go out fewer times a month
• Reduce expensive habits like drinking, smoking, or compulsive shopping
• Reduce your entertainment subscriptions
• Save and buy second hand

6. Set personal boundaries

So that stress doesn’t get to you and you stay calm, it’s important to set personal boundaries. Talk to your children and parents, be honest about your situation and ask them to show compassion for you.

You don’t have to stop helping them, but from time to time you have to be willing to say “no” for your benefit and ultimately their benefit. At the end of the day, you’re no good to anyone if you’re burnt out, stressed, and in financial trouble.

Preparation for work as a sandwich supervisor

As children live longer at home and medical advances allow the older generation to live longer, I believe sandwich generations will become even more common in the future.

Even if you’re not quite in the sandwich generation yourself, you should start planning, especially if you have kids now or plan to start a family in the near future.

If you’re able, start setting aside extra money now for retirement and emergency savings so you can sacrifice more if needed in the future.

Christopher Liew is a CFA charterholder and former financial advisor. He writes personal finance tips for thousands of Canadian readers at Blueprint Financial.