Sandwich Generation Canada: My Why For Financial Independence

There’s been a huge number of personal finance blogs that have cropped up recently with the goal of FIRE (Financial Independence Retire Early).  It is clear that many people don’t want to be working 9-5 until age 65 for their defined benefit pension anymore, and instead, want to live their lives on their own terms.  However, many don’t envision being the sandwich generation in Canada.

Many people are realizing that free time (time to do what you want) is more important than consumer goods and newest electronic gadgets, such as the newest iPad or the newest iPhone.  These ‘things’ fill the emptiness or void temporarily that we have inside but doesn’t usually help you feel happy for very long.

FIRE is a great movement, and I must say it’s very inspiring to read all the motivation out there to live a work optional life, in fact, I’m trying to follow the FIRE recipe myself to an extent.

I’m Not that FiRE-Y but do want a work optional lifestyle

To be honest, I’m not that FIRE-Y.  I don’t want to completely retire at age 38, live a nomadic, minimalist, lifestyle off the grid, and hope the $1,000,000 nest egg is going to last until I am 95, through cycle upturns and downturns.

I don’t mind working at my job (actually I kind of enjoy it most of the time), but I just don’t want to be doing it full-time or having to rely on it.  I want the option to work to be flexible and on my own terms, you know, like part-time FIRE.

The work optional lifestyle and financial independence is much more important that the retire early part of “FIRE”, because of one thing that will happen.

Being part of a sandwich generation in Canada.

What Does the Sandwich GeneratioN Mean?

Here is the simple formula to define what the sandwich generation means (I just made this formula up with my superior math skills).

Caring(Aging Parents + Young Children)= Sandwich Generation in Canada

It is when you are caring for both your aging parents and your young children, and you are caught in the middle (or sandwiched) between both of these caregiving duties.

Once people hit their 80’s health issues usually start to occur inevitably.  Frailty, hospital admissions, decreased independence, and decreased mobility also begin to creep in.

Sandwich Generation Statistics

According to a recent Angus Reid poll on Caregiving in Canada, 1 in 4 Canadians over the age of 30 are already providing care to an older adult.  Most people who are providing care are in their 40’s to 50’s and they also have children under the age of 21 to take care of.

Caring for Aging Parents

Of course, being past your 80’s and frail is a generalization, there is a lot of heterogeneity with older adults and frailty can hit earlier in late 70’s or even early 70’s or later in mid-80’s, depending on health conditions that crop up.

It’s kind of a crap shoot to know what kind of health one might be in, and of course dependent on the fitness lifestyle of the individual.

For example, my great aunt is in her 90’s and she’s very fit, plays badminton three times a week and I’m pretty sure has more muscle mass than my mom who’s in her 70’s, doesn’t exercise, and thinks walking 5 metres from her car to the grocery store is considered exercise.

Charlie Munger is 97 years old this year and he’s still got it.  He’s a bit more frail over the years but is still doing his thing at The Daily Journal AGM.

Once frailty hits, there will be medical appointments, follow up with specialists, helping with banking and grocery shopping if they aren’t able to do it anymore, and encouraging them to use a walker when they don’t want to give up their independence or ‘look old’.

Also, it means you will have to unfortunately witness your parents fall because they don’t want to use the aforementioned walker.

To top it all off, there is the issue of family dynamics and siblings- who is going to do what?  People are different and have different perspectives, even when they are raised by the same parents.

One person might think the ageing parent should go into a home, the other thinks they are too busy with their job to help out, and often the entire responsibility of caring for a frail parent falls on just one sibling.  There may be arguments about who gets to be the Power of Attorney for financial matters.

It will be never ending and if it is a difficult situation, can have the potential to tear families of origin apart.  End of life planning will be difficult for families with these dynamics.

Caring for Young Children

Now to address young children.  Children are a lot of work and take a lot of energy.  Toddlers are even more work and more physically exhausting.  School age children have activities and school work and lessons galore.

Still school age, preteen, or adolescent, and perhaps just starting to withdraw their RESP for post secondary school.  They will probably be in the throes of extracurricular activities, will need to be chauffeured to soccer games, hockey practices, music lessons etc.  It’s already busy enough, and then you add on ageing, unwell parents to the mix?

Life with ageing parents and young or school age children is going to be BUSY.

It is the recipe for burn out.

i don’t want to be be sandwiched

The above scenario is described as the sandwich generation in Canada.  According to Wikipedia, the sandwich generation is caught between caring for ageing parents and their young children.  People in this sandwich generation demographic will be in their 40’s to their 60’s.

I don’t want the stress of not being able to take my aging parent to a medical appointment because of a full-time job.

I don’t want to be exhausted at the end of the work day and have little reserve and energy to watch my child at his or her soccer game, and then have to take care of a parent who needs help with their medications and cooking.

Of course one could say that I don’t need to be taking care of my aging parents or in-law but for me, I plan to help out since they helped me for the first, what, 18 years of my life and they helped raise my husband to be the great guy that he is today.

This is what financial independence buys you.

Time and flexibility with your life.

my plan for financial independence

Hence, the timeline for my financial independence is around 10-15 years, and I hope to have a liquid net worth of $1,000,000 by age 40 (that’s less than 3 years to go).

With a $1,000,000 portfolio (not just net worth, investable assets) invested in dividend paying stocks, my passive income generated could be around $35,000 annually provided my average annual dividend yield is 3.5%.

Hopefully this will give me enough money to life a work optional lifestyle (to even strive for Fat Fire) and be able to care for my aging parents or parent in law if needed and at the same time care for my children without feeling too time crunched.

Finally, as I get older, I want to make sure I have enough savings to hire private care in my home if needed so that my children don’t feel the burden and guilt of having to take care of me while also caring for their young children if they have any.

Private care live-in in the home can range upwards of $8000 to $10,000 a MONTH.  That’s $120,000 a year.  And in 50 years I’m guarantee that number will be much higher because of inflation.  How many years would one need private care?  Five years of being depending on care (e.g. being wheelchair bound or unable to get out of the house) is already over $600,000, it would be interesting to see the 4% safe withdrawal rate calculations on that.  Maybe we will have robots by then 🙂

This is why I’m in the ‘never touch your principal’ camp at least until the last few years of my life when the big cash guns need to be deployed for live-in care.

I’ve said a few times before on this blog.  No one thinks about their Mercedes Benz or their Rolex when they are on their death bed.  No one wishes they worked harder in life.  Relationships matter, and losing your friendships are one of the top five regrets of the dying.

Anyone care for a grilled or burnt sandwich or even a double decker sandwich (for boomer aged grandparents taking care of their 100 year old parents and also their 3 year old grandchildren)?

What do you think of the sandwich generation in Canada?