Are you part of the sandwich generation and feeling the impacts on your bank account?
The sandwich generation refers to those in the 35-55 year age range, those who care for their own parents while also supporting their own children. Financially, they’re stuck in the middle.
According to Statistics Canada, as of 2016, the sandwich generation included more than two million Canadians. As Canada’s population ages and the older generation is no longer capable of caring for themselves, this number is expected to rise.
Young children are, for the most part, wholly dependent on their parents, and thus their expenses are to be expected. However, with rising home prices, and wages not rising with inflation, more and more young adults are choosing (or finding it difficult to do otherwise) to stay at home with parents rather than leaving the nest and living on their own. This, of course, can put a strain on the parents’ resources at a time when, historically, finances should be trending downwards.
Furthermore, many in this situation are also caring for their older parents, those who are in retirement but need assistance, whether financially or otherwise. This has been cause for some concern for those Canadians worried that funding their parent’s retirement will erode their own savings.
Caring for kids – no matter their age – is expensive. Caring for parents and helping them out financially can also be costly. But what’s the solution?
One of the most important things you can do if you’re part of the sandwich generation is keep the lines of communication open, and have a plan, especially with aging parents. This means having a real conversation about finances, where your parents stand financially, looking at savings and assets and how these can be used to better prepare for future costs.
On the other side, it is also important to communicate with your kids. Be frank about finances and budgeting, and help them better understand money and the importance of saving. For older children, a discussion surrounding debt, future goals, and saving for their future goals can help.
Being stuck in the middle is often a tough spot, especially when money is a concern. Careful planning and clear communication, as well as a strategy to get finances (no matter if they’re yours, your child’s or your parents’) back on track is crucial.
At Spergel, we can help you best prepare for the future and develop a plan to ensure all members of your family are well situated for financial freedom.
Call us today, toll free, for a free consultation: 310-4321.