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[fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][fusion_text]Are you stressed out by growing financial responsibilities?  You’re not alone, more than half of us between the ages of 45-64 are caring for children, aging parents, or both, this all according to a new study by BMO Nesbitt Burns.

This financial squeeze has been dubbed the “sandwich generation”.  As you can imagine, it’s a heavy burden that affects us both emotionally and financially.  As a result, we’ve greatly reduced the amount we put aside for our retirement.

Don’t worry though; there are ways to break free from what seems to be an endless cycle.

How much do we need?

ONE MILLION DOLLARS!!!!! Okay we don’t actually need a million bucks, but it’s important to establish a number so you have something to work towards.

According to the BMO study, $818,000 is the average amount Canadians feel they need to retire comfortably on.

In the recent MoneySense article: The Stress-Free Guide to Retiring Rich, it was suggested that couples only need to have $625,000 saved to have a comfortable retirement.  This would give us a middle class lifestyle by providing us with $55,000 a year income, of that $30,000 would come from the Canadian Pension Plan and Old Age Security.

A decent plan, but I personally think that MoneySense is being a bit generous with the estimates of CPP and OAS.  I expect the payouts to be greatly reduced by the time I retire (30+ years from now).

sandwich generation

What should we do?

Have a plan – It’s a bit disappointing that only 40% of the sandwich generation have a financial plan in place.  Without a plan it’s impossible to figure out how we plan to reach our goals.  Establishing a financial plan will not only help us manage our money now, it’ll also ensure we have enough saved to have the retirement lifestyle we dream of.

→Related: Saving for Retirement, Talk About it

Don’t worry about the kids – Of course we have the best intentions in mind, but delaying saving for retirement, so we can fund out child’s RESP instead is a huge mistake.  Our kids have a lifetime to save and earn money, but we’re now on a fixed timeline, so saving for our retirement is the bigger priority.  The last thing we want is to extend our children an invitation to the sandwich generation.

Pay yourself first – Using auto-payments is the easiest way to pay yourself first.  Set it up so 10% of your salary automatically gets transferred to your RRSP the day after you get paid.  Sure the hit on the paycheque will hurt at the start, but after a while you won’t even notice the difference.  Just remember to check on your RRSP at least once a year to make sure what you’re invested in still fits your plan.

Final word
With our current debt loads in Canada, I fear that the sandwich generation will become a permanent generation.

If we’re not prepared financially when we retire, it’s going to create a heavy burden for our children, so make sure you’re taking the right steps so they don’t feel the squeeze.

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  1. AAFS Insurance on August 21, 2014 at 1:39 AM

    Interesting to hear your thoughts on RESP vs RRSP. If you consider the fact that the government provides a 20% grant for contributions up to $2,500 for the RESP, then the argument becomes much closer. On the one hand, you have the tax deferral attribute of the RRSP, but if you neglect the RESP, you’re throwing away free money.

    It’s a difficult balancing act and depends on your personal situation, but I think you can make a case for either savings plan.

    • Barry Choi on August 21, 2014 at 1:45 AM


      Fair point about the RESP grant. I definitely love free money and recommend it always but in my opinion if you only had enough money for one I think I would recommend RRSP’s.

      My thinking is, what good is paying for your children’s educations if in the future you’ll need to rely on them to fund your retirement.

      • Brian So on August 21, 2014 at 3:34 PM

        Fair enough. I wouldn’t want to depend on my kids to support me in retirement either. Then I would be responsible for perpetuating the sandwich generation.

  2. […] at Money We Have describes how the sandwich generation is feeling squeezed. The best remedy to this is to have a plan for how much you’ll need to save in order to have […]

  3. […] Having a baby is a serious decision and one that should be made with our finances in mind. Most parents will divert all their savings towards their children but it’s foolish to ignore your own retirement savings in the process. The last thing you want is for your child to be part of the sandwich generation. […]

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