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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Image courtesy: dungodung