Are you a member of the Sandwich Generation

Well you’re not alone. And the sandwich is growing!

One notable authority on the subject has categorised three demographic groups affected by this issue:

Traditional Sandwich (usually 30s-40s): Caring for/helping ageing parents and raising their own children.

Club Sandwich (usually 50s-60s): Those sandwiched between the needs of elderly parents, adult children and caring for/helping with grandchildren

Open Faced Sandwich: Anyone else involved in elderly care

So it’s an issue that can potentially affect anyone from 30 years+. The ramifications can be far-reaching as caring for others may not only affect your lifestyle but also your finances.

For some people, it can affect their working life – and therefore income – at crucial pre-retirement years of life. A Canadian study found one in seven affected workers had to reduce working hours or even give up work altogether. In the US the total cost to employers (in absenteeism, interruptions and lost productivity) for all full time, employed caregivers is an astounding $33.6 billion pa. Such figures indicate this is not an isolated problem.

It is also important to note this isn’t a temporary trend as the factors fueling it are not going away. They include:

an ageing population
increasing life expectancy
growth of ‘two income’ families that require childcare options (now 67% of families with children under 18)
high cost of care for the elderly
adult children living at home longer – some into their 30s
couples having children later
Generation Y has significantly delayed marriage – the median age of first marriage is now 29.9 for a male and 28.3 for a female.
Childbirth for Gen Y has also been delayed with the median age of parents now 33 (male) and 30.8 (female).

How do you protect yourself from the side effects of this trend?

Planning ahead and having agreed contingency plans is an important first step. Talking together as a family is essential so every family member is aware of the needs and expectations of others – both now and in the future. Here are some key points for consideration by each generation:

1. Are you thinking about having children in the future?

Plan ahead now for a period of reduced household income
Pay off your credit cards
Create a household budget
Practise living on one income
Investigate your leave and/or government assistance entitlements
Make sure you have a comprehensive risk portfolio in place as well as an estate plan
If you have a home loan explore your options for alleviating any future mortgage pressure.
Investigate childcare options and costs – register your name at centres nearby to home or work. Make sure you discuss potential childcare assistance with grandparents now so everyone can start planning for the future.

2. Are you a Baby Boomer with adult children still living at home?

Gen Y kids living at home into their 20s (and beyond) can be a great way for them to get ahead financially. However, the knock on effect for mum and dad may be that retirement is delayed or retirement savings are depleted.
How do you make it work for everyone?

3. Will you have to support your elderly parent(s) if their money runs out?

Become familiar with finances and care preferences of your parents. If you know the situation you can plan ahead.
Ensure necessary legal documents are in place, such as Wills and powers of attorney.
Research entitlements, benefits and programs available through government agencies or non profit organisations. It helps if you know where to go for assistance before you need it.

This trend may become the ‘new normal’ for many families.

What does this mean for future generations?

Planning is the key. But even with careful planning there may be life events that affect your financial situation.

Lex Goldsmith | July 2016