Financial survival tips for the sandwich generation

A stock photo showing three generations. (RDNE Stock project/Pexels)

The so-called “sandwich generation” finds itself in a unique and challenging position as its members balance providing financial support for both aging parents and children, all while managing their own financial goals.

The pressure faced by this generation can lead to personal and financial stress, resulting in less retirement savings, difficulty paying the bills, or being overworked as they’re forced to take on second jobs to make ends meet.

Below, I’ll provide some practical tips to help those in 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, head of Toronto-based Kensington Health Foundation, the sandwich generation consists of individuals who find themselves caring for children under the age of 15 as well as aging or ill parents.

However this could also be expanded to parents with live-in adult children who are balancing providing room and board to their working-age adult children while also trying to provide financially for aging parents.

Who is most likely to be in the sandwich generation?

A recent Statistics Canada report revealed that individuals between ages 35 and 44 are most likely to be sandwich caregivers, followed by 45 to 54 year olds.

People in their late 30s and early 40s are most likely to have teenage or live-in adult children as well as parents over the age of 65.

Thanks to advances in medical and health technology, many 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 past two decades.

That said, even seniors who are still employed part-time may still require periodic financial assistance or physical assistance that can take sandwich caregivers away from their full-time careers and jobs.

Even seniors who work part-time may still need occasional financial or physical support. This can pull sandwich caregivers away from their full-time jobs or careers to provide the necessary help.

Challenges faced by the sandwich generation

For many, sandwich caregiving means higher living expenses, 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 caregivers say that their position has affected their overall health and well-being. Some of 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 work life

● Burnout due to overworking or balancing multiple jobs to provide

● Less personal time for hobbies, health, or recovery

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 that sandwich caregivers can apply to regain some financial control and peace in their lives.

1. Encourage your live-in children to contribute to the bills

If your secondary-school teenager is old enough to work, encourage them to get a summer job or a weekend job to help them take care of their personal spending or wants. Not only will this give them valuable life experience and teach them how to manage their money, but it means you won’t have to foot the bill for their weekend activities.

If you have a live-in adult child over 18 who’s not a full-time student, then you should encourage them to pay a share of the household bills. This means charging them a few hundred dollars a month for their room or asking them to contribute to grocery, electric, water, or internet bills.

2. Explore government benefits and tax credits

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

3. Buy groceries in bulk for the whole family

If you’re buying groceries for both your children, yourself, and aging parents, consider buying groceries in bulk from wholesale grocers to help you save on your expenses. Once you bring the groceries home, divide them up, and ask for contributions.

4. Prioritize your retirement savings

Don’t let guilty feelings make you de-prioritize your own retirement savings. At the end of the day, you’re the only person capable of taking care of yourself.

Even though you may give extra to your children or parents, make sure that you’re still prioritizing your retirement savings. One day, you’ll no longer be able to work and will need these savings to lean on to help you pay the bills and take care of personal living expenses.

5. Reduce your lifestyle costs

This goes in hand with the previous tip about prioritizing retirement savings. If you have to reduce spending in one area of your life, it shouldn’t be the amount you save for retirement. Instead, you should increase your retirement contributions and decrease your lifestyle costs.

This could mean:

6. Set personal boundaries

To prevent the stress from getting to you and maintain peace of mind, it’s important to set personal boundaries. Have a conversation with your kids and parents, be honest about your situation, and ask them to empathize with 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 theirs. At the end of the day, you’re no good to anybody if you’re burnt out, stressed, and teetering on a financial cliff.

Preparing to be a sandwich caregiver

As kids live in the home for longer and medical advances allow the older generation to live for longer, I believe that sandwich generations will become even more prevalent in the future.

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

If you’re able, begin setting extra money aside toward retirement and emergency savings now so that you’re able to sacrifice more in the future if required.

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