16/05/19Sandwich generation faces financial squeeze
We often hear about the so-called sandwich generation and the financial pressures they face.
Sandwich generation refers to a group of people trapped between financially dependent adult children and demands from their elderly parents.
It can place a great deal of time and financial pressure on individuals and couples, who might otherwise be in the prime financial position of their lives.
New research from insurer SunLife has found that half of the people in their 50s, 60s, 70s and 80s are continuing to support their children financially.
They also found that one in 25 people aged 55-59 are providing financial support to elderly parents.
The research found that it’s men over the age of 55 who are more likely to be supporting a family financially. 57% of men said they continue to help their children, grandchildren or parents, or a combination of all three, compared with 47% of women.
Over 55s in the AB social group were also more likely to provide financial support to younger or older generations, with those living in Wales more likely to give this support than people living in England, Scotland or Northern Ireland.
It’s very likely that being a member of the sandwich generation is bad for your wealth.
People in their 50s reported struggling with their personal finances, with more than a quarter saying they are worse off than they expected to be at this time in their lives.
This proportion of people struggling compared with around one in five people in their 60s and one in ten of those in their 70s or over saying they were worse off financially than anticipated.
The reason people in their 50s are financially worse off than expected? Their kids, of course.
Adult offspring needing financial support isn’t the only reason, with the rising cost of living and reduced savings rates also contributing to the situation. But 21% said they were financially supporting their adult children and 15% said they were providing financial support to someone who was ill.
One common attribute of those living in the sandwich generation is a reasonable amount of property wealth. All of those questioned for the survey said they owned their home, either outright or with a mortgage.
They had lived in their homes for an average of 24 years, with the average value of their homes increasing by £135,525 to reach £290,658.
Despite having this wealth tied up in property, most said they didn’t want to move home, downsizing to free up capital they could use to improve their financial position.
Simon Stanney, equity release director at SunLife, said:
Our research shows that one in four people in their 50s are not as financially comfortable as they thought they’d be at this stage in their lives – of those, one in five say that is because they have ended up supporting others financially. Many need a cash injection, but don’t want to move and for these people, unlocking some of the value in their homes via equity release could offer the solution.
While equity release might be one option to consider for asset-rich, cash-poor members of the sandwich generation, it’s essential to review any product option as part of a more comprehensive financial plan.
By considering all of your choices and options, you can build a plan for the long-term and ensure all of your financial priorities are met, both now and when you are much older.New research found that half of the people in their 50s, 60s, 70s and 80s are continuing to support their children financially Click To Tweet