The Sandwich Generation - Is this you?
For many, the long-awaited prospect of retirement is approaching, but does it still look like you planned? An increasing number of people of working age are in the precarious position of looking after their dependent children at the same time as caring for elderly parents and are, essentially, ‘caught in the middle’.
The issue of the ‘sandwich generation’ has become even more pressing as a result of the Covid-19 pandemic, with record numbers of adult children moving back home and with elderly parents needing new forms of care. The pandemic has put many in unsustainable positions; people who were already having to juggle their own workloads are now facing the additional strain of looking after multigenerational loved ones, whom rely on them for financial, emotional or physical support.
The impact of these pressures can take a heavy toll both financially and personally, at a time where you should be planning your own financial independence. So, what can you do?
Have the conversation
If you think your parents or elderly relatives may need care in the future, it’s worth having the conversation with them as soon as possible, so that you are all on the same page. Whilst it’s an uncomfortable subject, most people’s parents do not want to be a financial drain on their children and will want to pay towards any costs, if not cover them entirely, if they can afford to do so.
It’s also worth considering having wider family discussions to make sure you are not shouldering all of the burden on your own. However, if the issues seem complex, you may want to call in the professionals. We can help you to assess what financial strategies will work for you so that you are prepared for whatever might be coming down the road.
Put yourself first
For parents that need your support during the day it can be tempting to reduce your working hours or leave your job altogether. But, as well as forgoing income, you could lose valuable benefits like pension, life insurance and health benefits offered by your employer. The long-term cost can be high and could end up having a significant impact on your retirement planning. As an alternative, you could consider adult day care. You should also find out what state support you and your parents may be entitled to, as every little helps.
Your children can also be a huge drain on your resources. Helping them develop good money-management skills is key to them gaining their financial independence. If your children have debts or need to get their careers on track, paying for them to have financial or career coaching can be a more valuable investment than simply subsidising them. If they are earning an income, it’s perfectly reasonable to ask them to pay their way and contribute towards the household, whilst encouraging them to save.
Get covered
You may also want to investigate alternative solutions such as an immediate care plan. This provides a regular income for life to pay for care, in exchange for an upfront, normally non-returnable, investment. Equity release is another option but, as with all financial solutions, it is important to assess whether or not it will work for your family.
If your parents need care, a review of their savings and investments would be wise. Their need for income will increase significantly, and it is important that their investments are structured to support this. A Financial Planner will be able to help you here.
Plan for the future
Many people who have experienced the pressures of being a part of the sandwich generation do not want to put their own children in a similar position down the line. If you don’t want to rely on your children for your future care, it’s important to think about how this cost will be covered. At BFP, we work with all of our clients to ensure that these types of scenarios are planned for. So whatever life has in store for you, we’re here to provide the peace of mind that comes with having a bespoke and comprehensive financial plan in place.