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The Sandwich Generation: Juggling Financial Responsibilities for Parents and Kids

What is the ‘Sandwich Generation’?

This term refers to people “sandwiched” between having to support their children and their ageing parents.

This group faces a dilemma: how to save for retirement while providing emotional and financial needs for loved ones.

Key societal factors contribute to the growing sandwich generation. For one, the average lifespan is increasing, which means this generation’s parents – the baby boomers – are likely to age well over their 80s.

Couples are also choosing to have children at older age, resulting in having dependent children during their retirement age.

Add to these the rising costs of education and housing, and you’ve got a tough road ahead for the sandwich generation.

In fact, experts predict that within this coming decade, the average age of first-home buyers will already be at their 40s and 50s! And the retirement age is being pushed back as well due to the compounding costs for every individual.

According to a report, intergenerational dependency is quite evident among Australians. The sandwich generation shells out over 100 billion dollars for children’s education expenses. At the same time, about 700 million are allocated for ageing parents’ medical and health expenses.

These figures suggest that close to half of near retirees are still unable to pay off debt like credit card debt and mortgage.

How the sandwich generation can cope with juggling financial responsibilities

The issue of what the sandwich generation is going through is the topic of discussion in this interview.

Michelle Tate-Lovery of Unified Financial Services shares that about 1.5 million Australians are in this category. These people are from 40 to 65 years old.

In her line of work as a financial planner, Lovery observes that a lot of their clients belong in this group, and they come to seek assistance on “complex family matters.”

For her, many do not see the true benefit of consulting with a financial planner about their future.

“They think…you go and see a financial planner when you have money to invest, but they don’t think a financial planner can help them resolve some of the bigger questions that they’re asking of themselves and their family,” Lovery says.

These questions could also include when you can retire, whether you can send your kids to private school or not, whether you can afford to buy your adult child a home, and others.

Lovery further mentions that goal setting is a part of their client interaction. “We flesh out what makes their ideal life, and we dig deep to find out a lot about their family…and what their concerns are.”

Identifying what she calls “tension points” of spending can help determine future decisions. For instance, you would reconsider retiring if you’re planning to help a child buy a house, or pay off student loans.

Lovery says, “We put a price tag on it. You can have this, and this is the trade-off.”

With all their financial responsibilities, planning with purpose is key with the sandwich generation.

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