The term ‘sandwich generation’ was coined in 1981 by two social workers who noticed the particular challenges that the generation of those middle-aged individuals who were responsible not only for raising their children, but were also responsible for caring for their aging parents. Sandwiched in between two attention-requiring generations, hence the term.
Chartwells reports that Canadians between 45 – 64 provide 75% of informal care for older adults. Those Canadians who are caring for a parent (or parents) spend, on average, between 5 – 30 hours per week completing informal caregiving duties. Pile on to that childcare responsibilities and work obligations, and it can start to lead to some serious burnout. And that doesn’t even consider the financial stresses that the sandwich generation needs to contend with.
“Financial obligations are typically higher as they are looking after two generations,” Howard Wong, an Investment Counsellor with WealthCo, points out. “Each generation has different needs. For example, members of the sandwich generation are at an age where they are paying more to raise children and help with their educational costs. And then their parents are also at the age where they may need some support financially if the parents haven’t planned for their later years. Longevity is a huge issue.”
If one’s parent or parents are in ailing health, assisting with medical appointments and treatments can be time-consuming and costly. All of this in addition to the standard living expenses that this demographic may already be struggling with including mortgages, student loans, and vehicle payments.
For those who are currently struggling with the financial repercussions of being a member of the sandwich generation, Wong shares the following strategies.
“Get educated financially and embrace financial planning – ideally with a knowledgeable and competent financial professional. Discipline, creating budgets and systems, and automation are critical to one’s financial health, and the right financial planner will help with all of this.”
While this is sound counsel for those in the throes of caring for an aging parent, the best course of action involves proactively planning for this very likely eventuality.
“Have an open and honest conversation about what the expectations are for the standard of living and care when parents age,” Wong recommends. “Different standards of living have different costs and potential social programs to address and support those costs. Do your parents feel comfortable with having their costs covered by their children, or do they worry about being a burden? Are the adult children financially capable of meeting these wishes and at what cost to them and the next generation? How will this impact the family tree down the line?”
Canadians have the sixth highest life expectancy rate in the world (at 81.2), coming in behind Japan (83), Switzerland (82.3), Italy (82.1), Australia (81.6), and Sweden (81.4). Just fifty years ago the average Canadian could expect to live to 71. This paints a picture of a society in which living expenses are needed for a whole lot longer than they were a few decades ago. And life expectancy is expected to continue getting higher and higher. By the time we hit the turn of the 22nd century, the average Canadian will live to be over 90 years old.
Planning for parental aging extends beyond the financial conversations. It’s equally important to have those tough conversations about their wishes.
“Discussing parents wishes ahead of time is a must-do,” Wong cautions. “The last thing anyone wants is to be having to make difficult decisions at the eleventh hour when emotions are running high. Wills, powers of attorney, personal directives – all of these need to be in place.”
On the other side of the sandwich, you have your offspring, and the financial costs associated with child rearing. Prudent planning is also needed to ensure you are able to continue to provide for your family and meet their needs.
“Plan ahead and map out what finances look like. New parents sometimes don’t recognize the drop in income from parental leave, or from potentially having a parent leave the workforce for an extended period of time. Childcare costs, saving for education, risk management costs, and other ancillary costs, add up like you wouldn’t believe, so be realistic and have your eyes wide open about your financial situation.”
WealthCo’s Integrated Advisory team understands that it’s not merely financial planning; it’s life planning. If you are interested in further discussing your life plan, reach out and experience the peace of mind that planning provides.
A member of WealthCo’s Integrated Advisory community, Howard Wong is a seasoned investment professional driven to building relationships, achieving his targets, and solving problems. Howard is an Investment Counsellor with WealthCo and is a lifelong learner dedicated to providing value-add to financial products and services.
The Integrated Advisory community consists of a network of progressive CPA firms, along with best-in-class professional advisors, service, and product specialists, who work together to deliver an elevated and holistic client experience. One that optimizes both their personal and professional lives with an integrated financial strategy designed to help clients reach their goals.