Feeling the multi-generational squeeze

Wealth planning

Lifting the load off of the Sandwich Generation through wealth planning.


This article is part 2 of “Life in the Sandwich Generation,” featured in Perspectives Volume 1, Issue 1, Summer 2011 (page 26).

Changing times, changing needs. It’s a simple statement, but one that carries significant weight when applied to the large-scale shifts taking place among the Canadian population, and the demands those shifts may create. In fact, according to the 2016 Census data, Canada has just recently experienced some historic changes when it comes to population distribution and longevity, ones that are staged to become even more pronounced in the coming decades. For example, there are officially now more seniors in Canada than there are children, which is the first time in history this has occurred. There has also been a 20 percent jump in the number of seniors since 2011, which is the biggest increase in 70 years. And, of all age groupings, the fastest growing demographic is said to be Canadians who are 100 years or older.1 Yet while these statistics themselves are eye-opening, two key questions to address are what will the biggest impacts be and for whom? One demographic where the strongest effects may be felt is the “Sandwich Generation” — loosely defined as those who are caring for an elder or parent and their own children. This multi-generational squeeze is increasingly becoming a reality for many Canadians, with over 8 million individuals providing some form of care for a family member or friend, and 44 percent of caregivers between the ages of 45 and 64 caring for both a parent and their children.2

The generations at a glance

Generally speaking, the current Sandwich Generation is largely represented by Baby Boomers and those who belong to Generation X. With longer life expectancies across Canada, however, even the very definition of the Sandwich Generation, and what that role entails, is broadening. Some families and individuals are beginning to face even more complex situations where they have to manage and navigate wealth not just for three generations, but four. This additional generation has led to a newer term, the “Club Sandwich Generation,” in which an individual is sandwiched between aging parents, adult children and grandchildren, or, those with young children, aging parents and grandparents.

When it comes to wealth planning, the potential implications for those who are “sandwiched” are significant, as the demands and responsibilities tend to have an impact both financially and emotionally, affecting everything from retirement planning to estate and wealth transfer planning. Age plays a critical factor in the wealth planning process, and the following table, highlighting generations by date of birth, helps to illustrate the wide range of demographics and dynamics that may be in play for many Canadian families.

mom dad daughter son lying on grass
Silent Generally born before 1946
Baby Boomer Generally born between 1946 and 1964
Generation X Generally born between 1965 and 1980
Millennial/Generation Y/“Net Generation” Generally born between 1981 and 1993
iGeneration/Generation Z Generally born 1994 or later

Bearing financial and emotional burdens

The pressures faced by many in the Sandwich Generation are substantial. Oftentimes, those who are sandwiched get pulled in a number of directions, constantly trying to manage and prioritize the needs of their children and their aging parents, while juggling their own personal responsibilities, including work, home and marriage, to name a few. With so many overlapping demands, it’s unfortunately the needs and well-being of the sandwiched person that often become compromised.

Financial – Statistics indicate that 1.6 million caregivers in Canada take time off work to provide care,4 which carries the cost of lost income or foregone vacation time, and almost 2 million pay out-of-pocket care-related expenses for aging parents.5 With these types of financial impacts, it’s no wonder that according to survey data, 55 percent of those sandwiched are concerned that supporting their parents will impact their retirement.6 These types of financial stresses are further compounded by the fact that within many families, there tends to be a much earlier transfer of wealth, as children are remaining at home for longer for a variety of reasons (e.g. pursuing higher education, highly competitive housing markets, more difficult to become established in a career), so there are often additional costs and pressures for parents in that regard.

Emotional – Witnessing the decline of an aging parent or loved one can take a very large toll on many individuals, coupled with the physical and mental stresses of trying to balance the many overlapping roles and responsibilities of day-to-day life. The strong emotional effects on the Sandwich Generation are clear, as over half of those who care for a parent report experiencing psychological distress,7 and nearly 30 percent report giving up sleep or social activities on a daily basis.8

Human interaction and personal relationships in reducing emotional planning

smiling mom dad and two kids

When it comes to overall wealth planning, generally speaking there is a strong emotional element that plays a key role in decision-making for all individuals. In regards to the Sandwich Generation, because the demands and pressures are unquestionably large, emotions are often heightened to an even greater extent and often in a way that may cloud what the best course of action is, whether that’s for the individual, for a family member or for the family as a whole. The power of emotion in this regard drives home the importance of having qualified professionals who can offer support, guidance and insight around wealth matters, while reducing the risk of emotions driving wealth decisions. For individuals feeling the generational squeeze as they approach certain wealth decisions relating to retirement or wealth transfer, human interaction with a qualified advisor is a key component; through their expertise and experience, they help take the emotion out of wealth planning and have experience separating feelings from empirical evidence.

Furthermore, beyond the importance of human interaction in the more general sense is the embedded value in each client-advisor relationship, especially for those in situations where the family load is heavier. For those facing the challenges of being sandwiched, there’s an invaluable benefit of having an advisor who fully understands each and every aspect of your personal and your family situation, and who has been a part of your life during multiple stages and events, both expected and unexpected, so they can provide the appropriate guidance and help that’s customized specifically for you.

Lastly, it’s also important to look at all of the disciplines within wealth planning, how they’re interconnected, and how they can all be effectively brought together, especially when there are considerations and needs of multiple generations to factor in. And while the direct relationship may centre on an individual advisor, there is also a network of specialists and experts with which that advisor works closely to ensure every single aspect of wealth planning, for all generations involved, is appropriately accounted for.

Supporting individuals and families every step of the way

Whether it’s adjusting to the idea of retirement, dealing with life’s unexpected challenges, transferring a family business, or leaving a legacy for the next generation, RBC Wealth Management (RBC WM) understands that every individual’s and family’s needs are different. With a strong focus on personal needs and goals, paired with a team of specialized and accredited professionals across a range of disciplines, RBC WM offers customized, comprehensive strategies and solutions as part of our award-winning approach. Find out more about Our Approach and how we’re helping our clients realize their life visions.

Impact of the digital age on younger generations

father smiling with two daughters

While each generation is known for or defined by various features, one clear trend is the growing shift towards and reliance on digital technologies from the Millennial generation onward. This is truly highlighted by the most recently coined generation, the iGeneration, where the name itself stresses the centrality of digital technology in their lives — with the “i” representing the types of mobile technologies children and adolescents have and the fact that these technologies are mostly “individualized” in how they’re used.

When it comes to wealth planning, for the Sandwich Generation in particular, the question then becomes how best to integrate digital tools as a complement to planning in a way that helps to alleviate the load they bear. For example, among Millennials, there tends to be a greater demand for immediate access to their finances through online tools and technology designed to help them self-manage various aspects of their financial management. As such, this may mean helping younger family members utilize digital resources such as budget calculators, which can also effectively help to build financial knowledge and independence. Another potential benefit of educating younger family members and assisting in broadening their financial management skills is opening the lines of communication within multi-generational planning. For those in the Sandwich Generation, this can be especially beneficial in the sense that it may help establish an ongoing dialogue about wishes and intentions, and help younger family members develop a greater understanding of how the family circumstances impact areas such as wealth transfer and estate planning.

Planning and tracking your finances

RBC WM now offers a helpful, easy-to-use online Budget Calculator to assist individuals in organizing, tracking and assessing various aspects of their finances, which can then be used to support saving, investment and overall financial management decision-making.

RBC Wealth Management (RBC WM) is committed to assisting in building financial literacy among the younger generations. Please view the accompanying article in this issue of Perspectives, Introducing the RBC WM Financial Literacy Program.

Planning considerations for the Sandwich Generation

Given that, based on survey data, roughly 80 percent of those in the Sandwich Generation are unprepared or don’t know if they would ever be prepared to support their aging parents,9 it’s important to examine some strategies to help prepare, with a focus on two interconnected areas: open communication and planning.

Building an inventory of your parents’ financial situation

Being proactive to gain a clear insight into your parents’ financial picture, including what financial resources they have, how much there is, and where they are, can be very beneficial to help support aging parents if and when a care-crisis or other unexpected event occurs. 

Understanding your parents’ wishes

While approaching the subject is often emotionally challenging for many families, establishing an open dialogue about your parents’ wishes in advance helps to ensure you can support them in maintaining the type of lifestyle they envision and the care they want to receive in later life, as well as protect them both financially and emotionally.

toddler playing with blocks with dad

Locating and/or establishing estate planning documents

Key documents your designated attorney/executor will need to access include a Power of Attorney and a Will (living Will for medical issues and a traditional Will for outlining how assets are to be distributed). Knowing where to find these documents and some of the specifics within them will help ensure both generations are on the same page and decrease the likelihood of confusion or surprises down the road. Note: Provincial variances exist in regards to certain estate planning documents. For example, residents of Manitoba, Ontario, Quebec and Nova Scotia can create a living Will. In certain parts of Canada, a living Will may also be referred to as a Power of Attorney for personal care, a mandate, an advance health care directive or proxy.

Considering long-term care insurance

Arranging this form of insurance can help provide aging parents with the resources to maintain their lifestyle and remain independent if medical problems prevent them from performing certain activities of daily living. Securing long-term care insurance well in advance may be beneficial, as typically the earlier it is purchased, the less expensive it will be.

Assessing your own potential additional needs

With the time and financial burden many face in caring for multiple generations, establishing and maintaining an emergency fund may help you more easily manage an unexpected event or situation where you need to take an unpaid leave or modify your work schedule. If your work situation is becoming difficult to manage, consider communicating your caregiver role to your employer, as some may accommodate a flexible work schedule.

Prioritizing your own wealth, retirement and wealth transfer goals

While it may seem difficult to put your needs and goals first amidst attending to the needs of older and/or younger family members, planning ahead for yourself is critical. In a roundabout way, assisting an older family member may actually provide insights into many aspects of retirement and estate planning that can effectively be applied to your own planning down the road. For example, those who care for an aging parent often have a better understanding of the costs of healthcare, and can then better plan and save to ensure those funds are set aside for themselves in retirement. Additionally, the very experience of being in the Sandwich Generation may also impact an individual’s approach for wealth transfer. With exposure to factors such as longer life expectancy and higher costs of care, some may wish to instead pass down their wealth at death, as a means to ensure they can cover the potential and certain costs of retirement and longer life. For more information on the rising costs of healthcare, please view the RBC WM Fall 2016 Perspectives article, “The changing landscape of healthcare in Canada.”

Engaging children and younger family members as early as possible

For parents and those with younger family members, a key aspect of multi-generational planning is seeking ways to help the younger generation gain valuable learning experiences that build financial awareness and management skills. Involving children in certain aspects of planning — through both digital and traditional channels — may be a beneficial way to help them gain exposure and recognize the complementary benefits of online tools and client-advisor relationships. Doing so may also help open the lines of communication when it comes to wealth and wealth transfer planning, so the younger family members are receiving more guidance and awareness about your decisions and intentions.

In Quebec, financial planning services are provided by RBC Wealth Management Financial Services Inc. which is licensed as a financial services firm in that province. In the rest of Canada, financial planning services are available through RBC Dominion Securities Inc.

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