Are you a member of the "sandwich generation"? This is the generation that is "sandwiched" between the needs of their adult children (who may be still living at home) and their ageing parents.
Typically, members of the sandwich generation face saving for their own retirement while trying to provide for emotional and often financial needs of their adult children and increasingly-fragile parents.
A body of research and commentary in Australia and overseas suggests that the sandwich generation faces growing challenges for an array of demographic, social and economic reasons. These include:
- High housing costs encouraging more adult children to keep living with their parents until older ages than in the past or to return home after initially leaving. And high housing prices leads to more requests for parents to help their children buy a first home.
- A marked growth in the proportion of homebuyers with outstanding mortgages at older ages, placing the sandwich generation under greater financial pressure. (See Why grey mortgage debt is rising, Smart Investing, July 11.)
- The trend of couples having children at older ages. This contributes to holding debt until older ages and older parents still having financially-dependent children.
- Rising costs of aged care in Australia, making it tougher to help ageing parents.
- A growing phenomenon of members of the sandwich generation and their parents being in retirement at the same time due to increasing longevity. It's tougher for retirees to provide support for their adult children and ageing parents.
Commentary published in The Economist magazine a few years ago observes that the sandwich generation used to be aged in their mid-40s, give or take a few years, but the typical age has risen to around the mid-50s. In other words, 55 (or older) has become the new 45.
In an excellent research paper, The sandwich generation, independent Pew Research Centre in Washington makes the point that members of this demographic group face certain challenges and stresses "not faced by other adults".
While those in the sandwich generation try to help their adult children and ageing parents, it's crucial that they don't neglect their own needs – including paying off their own debts and saving for retirement.
Practical ways to assist parents include ensuring that they are receiving their government entitlements, offering to help them budget efficiently and helping them to obtain suitable accommodation given their age and health. And you can try to protect them from the fraudsters who sadly target the elderly.
One of the best ways that parents can help their children from a young age into adulthood is to encourage good budgeting and savings habits. This may make them less financially dependent later on in life.
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