‘Sandwiched’ women grapple with financial planning for themselves, kids and parents
When the term “sandwich generation” was first coined in the 1980s, it primarily referred to women who found themselves caring for their children while also supporting their aging parents. Fast forward to today, and the pressures of being ‘sandwiched’ between generations have only intensified.
“It’s not a new term. It’s not a new concept. But it’s lasting longer for this generation,” says Lynn MacNeil, a wealth, portfolio, and investment advisor with Richardson Wealth.
The average life expectancy has grown by about six years since the early 1980s – it’s now just over 81. Meanwhile, nearly half of adult children between the ages of 20 and 29 live at home, according to 2021 data, a big jump from the 32 per cent that did so back in 1991.
With each of the generations facing their own pressures related to finances, career and health, adult women can get sandwiched for many years, and wonder how to manage their own goals.
“You need to set boundaries with the kids, with the parents, with everybody,” says Ms. MacNeil, who’s based in Montreal. She personally feels the crunch between her job, teenage kids and mother, who’s in her ‘90s; her sister is in the same situation.
According to Statistics Canada, six per cent of people in Canada report sandwich caregiving, with more adults between 35 and 54 years taking on this responsibility, and more women than men doing caregiving.
While we live longer than ever, as Ms. MacNeil notes, “lifespan has increased, but healthspan has not.” Seniors can need care from professionals and family members as the years pass.
The younger age groups, meanwhile, deal with pricey postsecondary costs (tuition, on average, cost $4,400 per year 18 years ago. It’s now $7,360 per year ), high rents and a complex housing market. For example, a study by the Ontario Real Estate Association found that 29 per cent of parents now provide financial support to help kids purchase a home.
Women dealing with care and financial pressures need to share their priorities with loved ones and ask for help. “We’ve got to get over this phobia of talking about money and our needs,” says Diana Orlic, a portfolio manager, wealth advisor and investment advisor with Richardson Wealth who’s based in Burlington, Ontario – she’s of the sandwich generation, too.
Seniors’ needs
While we often assume our senior parents have all their paperwork in order, that’s a risky assumption. Start a conversation with your parents to ensure there’s a will – and you know where it’s located – and that power of attorney forms have been signed for future use.
“Some people just are not good at having a financial discussion with family members. So sometimes it’s really helpful to have that third party involved,” says Ms. Orlic, who says financial advisors can help organize and facilitate family meetings.
Advisors rely on a trusted contact person they can speak to if they’re concerned their client is making troubling decisions, so make sure one has been designated.
While some people from older generations live on very tight budgets, many have done well and may be planning to dole out inheritances. Increasingly, notes Ms. MacNeil, they’re giving to their grandkids as well, skipping a generation and giving directly to the grandchildren.”
“It’s important that grandparents who want to give have a strategic plan,” she says, taking into account taxes, different ages and, importantly, equity among their grandkids with different needs, and adult children who don’t have offspring. “You don’t want inequity among siblings,” Ms. Orlic stresses.
Teaching kids
The youngest generation is facing challenging times, which puts pressure on sandwich caregivers to dip into their own pockets: first for childcare, then registered education savings plans (RESPs), extra education costs, then support with a down payment for a first home, and perhaps a wedding.
Ms. MacNeil notices that some young people stay at home longer to avoid high rents, but keep living it up, and don’t squirrel away funds for later. “Parents are helping them to save by letting them stay at home, supporting them. The problem is these kids are not using these cost savings effectively.”
More than financial support, parents may need to offer education. “We have this innate feeling where we don’t want to see them stumble or fail,” says Ms. Orlic. But kids need to experience consequences when they don’t get wise about earning and saving.
What’s left
Sandwich caregivers devote time to others but need to set limits on their financial sacrifices.
“Parents need to have a wealth plan,” says Ms. MacNeil. “Especially if they have plans to help their kids financially, which should be in the wealth plan. And you know you’ve crossed a boundary if you are going to postpone your retirement to support your adult kids.”
Ms. Orlic warns that a financial plan for those doing sandwich care cannot revolve around a promised inheritance – and the grandkids should not bank on it either. “If someone says there’s likely going to be an inheritance at some point, we never work that into their financial plan. Unless there’s an actual trust in their name, absolutely not,” she says. Situations can change and those bequeathing money may change their minds or simply have less left over than planned.
The old ‘freedom 55′ dream may not happen for many women of the sandwich generation, especially if they don’t have a generous work pension plan. They will likely need to keep contributing to their retirement savings and maintain an emergency fund, even when they’re devoting extra time to caregiving.
In the end, creating a robust financial plan for the sandwich generation requires clear boundaries – both in terms of time and money. Setting these limits isn’t just about safeguarding your own financial future; it’s also about ensuring that you’re able to continue supporting your loved ones in a sustainable way. As Ms. Orlic advises, “Better outcomes stem from better communication.”
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Advertising feature produced by Globe Content Studio with Richardson Wealth. The Globe’s editorial department was not involved.