The Sandwich Generation Dilemma: Balancing Financial Priorities

What is the sandwich generation? The term was first coined in the 1980s and used to describe Baby Boomers sandwiched between their children and aging parents. Essentially, middle aged people responsible for both raising their children and taking care of their aging parents. Fast forward to the 21st century and the term is more broadly used to define Generation Xers.

It’s not difficult to see how providing for children and supporting older family members can be emotionally and financially challenging. Working eight hours a day, commuting, planning children’s extracurricular activities, helping with homework, preparing meals, maintaining a household, relationship, and finding time for themselves can create a difficult work life balance.

Providing care for aging parents or other relatives can make juggling the day even more difficult. Throw finances into the mix, whether its daily costs, mortgage, student loans, vehicle payments, groceries, etc. (which are already a big issue for most Canadians), and you can see that the sandwich generation is carrying a heavy load.

And the demands of the sandwich generation are only going to evolve as time marches on. Canada has the sixth highest life expectancy rate in the world, at 82.9 years of age. Fifty years ago, Canadians had a life expectancy of 73 years of age. By the 22nd century, we can expect to enjoy our 92nd year.

How Much Time Does the Sandwich Generation Devote to Caring for Two Generations?

Taking care of children and parents can make the sandwich generation feel like they’re being pulled in different directions on a daily basis. According to Statistics Canada, Canadians aged 45-64 provide 75% of informal care for older adults. This works out to anywhere from five to 30 hours per week.

This of course doesn’t take into account the number of hours it takes to care for their children. Nor does it factor in any financial stress. And finances are a big stress for all Canadians, in fact, money is the biggest stressor.

Financial obligations are going to be higher when you’re looking after two generations. And each generation has different needs. The sandwich generation needs to raise their children and think about educational costs. And it costs a lot more today to raise a child than it did 50 years ago. They also need to have enough money to care for their parents and help with medical appointments and treatments. The Sandwich Generation also needs to plan for their own retirement.

How Can the Sandwich Generation Take Control of Their Finances?

Unfortunately, it’s more difficult to save money today than at any point in the past 10 years. Almost two thirds (63%) of Canadians spend all of their net pay while 30% spend more than what they take home. This results in a growing number of Canadians needing to take on debt or access their savings each pay cycle.

So, what can the Sandwich Generation do to improve their financial situation? Communication is key. And not just with the spouse or partner. There is a direct correlation between having a financial plan and feelings of stress.

According to one survey, the vast majority of respondents who spoke with a retirement financial advisor were much more confident about their financial well-being than those who didn’t.

Talking to a certified financial planner or qualified portfolio manager not only helps you put pen to paper and document what you need to do to achieve your goals, but it can also give you confidence and peace of mind. And that’s important when you’re responsible for two or more financial situations.

Sharp Asset Management for Your Retirement Planning Needs

It might be a cliché, but there’s no one-size-fits-all approach to competing financial priorities. Every situation is unique. And you don’t need to manage it on your own either. If you live in Toronto or the GTA, the private wealth management and retirement financial planners at Sharp Asset Management will work with you to gain a thorough understanding of your goals and ensure you’re on the right financial path.

Sharp Asset Management is an independent wealth management firm that is 100% owner operated. We are not affiliated with any financial institution, securities firm, or mutual fund company. As a result, our investment decisions are unbiased. Nor do we earn any commissions or fees on investments we choose on behalf of our clients.

All of our investment counsellors are charter financial analysts, the highest level of achievement, and have over 10 years of experience managing portfolios. To learn more about investing with Sharp Asset Management, contact us today.