Tuesday, November 7, 2017
Boomers Feeling the Pinch: 5 Tips for The Sandwich Generation
Over the past 20 or so years a new phenomenon developed. As life expectancies grew longer and longer, children are often called upon to look after their parents. Couple this with the rise of the dependent adult child and in many instances, you have 40-60 years old caring for both parents and children at the same time. This difficult task has put the pinch on middle-aged adults. Trying the raise children to adulthood is tough enough, but add in caring for an older loved one and you have a recipe for burnout. For people in this boat it is extremely important to have all your ducks in a row financially. This leaves Boomers in a precarious spot. This post will be for those caring for a loved one while raising children and their financial needs. There are some important factors needed to maintain the livelihood of the “Sandwich Generation,” let’s look at a few of them.
1) Health Coverage is HUGE
When it rains, it pours is a common saying. I like to say, “When it rains, it floods.” If you are caught in the middle of the sandwich, having adequate coverage is almost more important than making a decent wage. Out of pocket costs can literally cripple you. This is because you are already being pulled from all ends, so any additional costs can throw you into debt. That is one of the reasons you have more and more retirees carrying a mortgage into their older years. It is crucial to have sufficient health and disability coverage through work. If you don’t have it through work, you must obtain it on your own. Relying on credit or home equity will set you back years and delay retirement. You must figure that if your already large salary is being squeezed from life’s expenses, having something take away that paycheque would be disastrous. This is the burden of the caring heart, sacrificing your own dreams to help another. Living off 65% of your income could throw you for a complete loop, so make sure you have adequate disability coverage through work, or get your own. Your Health is now your greatest asset, as you deal with loved ones whose health is not tip top. Lock in that health and protect your paycheque.
6 Lessons for the Sandwich Generation – Market Watch
2) The Good Old Emergency Fund and Budget
If cash is king, then the Emergency Fund is its queen. You must have cash on hand in case of emergencies if you are caring for another person. The reason this is so important is that adding interest charges onto your already stretched monthly budget can crush your cash flow. Having money tucked away to balance monthly cash flow is crucial. Sandwicher’s need to have slush money for life’s everyday expenses. Remember that it is the piling on of daily life that causes debt, not lavish lump sum spending. Outflows of minus $100 a week is $5200 a year. In 5 years you are over 25K in debt. Then suddenly, a large sum is needed, and it knocks you out of the park. Look to point one what one of those lump sums could be. When you have life pulling at you from every direction you must take time to balance the books and put some money away for emergencies. Replenishing the slush fund is easier than repaying debts, so using the Line if Credit for Emergencies is not smart.
3) Cut the Umbilical Cord
There must be a certain point in life where the kids can look after themselves. I remember the day where that was thrust onto me. I was 25 but had been living on my own since I was 18. Despite that, I still would periodically hit my pops up for cash if times got rough. I remember at that time I was in a deep hole and needed money quick. I turned to my Dad and he said, “I’m sorry son, I can’t help you.” That was one of the best days of my life, looking back of course. It forced me to figure things out for myself. It also made me realize that I had to put myself in a position where I would never be so vulnerable again. You must let go of the kids when they get older. You do this not because you don’t love them, you do it because you love them dearly. Taking care of their day to day life may prohibit you from taking care of yours, or your future life. Plus, if you take care of them now, you may need them to take care of you way before they should have to. Will they have the skills and grit to handle that job or will they crumble because you have coddled them their whole life? Think of letting them loose as an insurance policy on your sanity, now and later in life.
Parent’s Who Won’t Let their Kids Grow Up – The Guardian
4) Find that work/life balance
You must take time for yourself if you are juggling life in the sandwich generation. Chances are you are working 40-50+ hours a week and on top of that, your schedule is full of appointments, errands, and chores. Make sure, if possible, that you can shut off work when you get home. At this point in your life, you deserve a little peace and quiet and that doesn’t entail answering emails at 10 PM. You also need to find some alone time or time with friends to relax and unwind. This includes vacations and “sick days.” Take that time off to recharge and come back ready to rock. High levels of stress can lead to you burning out and has been known to cause health problems like diabetes and heart disease. Remember you are no good to the top and bottom pieces of bread in the sandwich if you are out of commission from burnout.
The Sandwich Generation Struggles with Burnout – The Globe and Mail
5) You must have Life Insurance and a Will
At this point in your life, you must think about if you weren’t here. Part of why I purchased Life Insurance as a 32-year-old with no kids is that I wanted my parents to have something if I passed on. I will never be able to fully repay them for raising me, but if they lose me there will be no financial hardship on them. This becomes especially important if there are people who desperately count on you for financial and physical support. You take care of everyone around you and if you are gone someone else will have to. Chances are that replacement would have to be paid. Make sure that you have that money in place through life insurance and that your wishes will be directed properly through a will. They are essential for anyone that cares about others in their life. All life insurance is, is a payment you make for the ones you cherish.
Make it a Goal to Protect Your Money – Budget Boss
Being in the sandwich is tough but it can be done. You must find the right balance of financial literacy and compassion to guide you through. Remember that the most important part of any sandwich is the middle, it holds all the good stuff. If you are in the middle of the sandwich, make sure you look after yourself. The rest of the sandwich depends on it.
Thanks for reading our post today on the Sandwich Generation and don’t forget to tune in tomorrow for some RRSP basics for Baby Boomers. If you would like to get help analyzing your situation shoot me a message at joe@budgetboss.ca and let’s chat over coffee. Have a great day friends!
“Each generation imagines itself to be more intelligent than the one that went before it, and wiser than the one that comes after it.” – George Orwell
Email – joe@budgetboss.ca
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