There is a recent phenomenon known as the "Sandwich Generation", which refers to working adults who have to support both their parents and children. This in itself isn’t a unique situation, but economic challenges and shifting demographics have compounded the financial pressures for the current Sandwich Generation.
Adequate retirement planning and budgeting are a must to ensure that you can take care of your own future and financial needs while continuing to juggle multiple priorities such as paying down housing loans, building education funds for your children and paying for medical bills or insurance for your children or elderly parents. Being financially adequate will not only enable you to retire on your own terms but also ensures your children break out of the Sandwich Generation cycle and are able to pursue their own dreams.
The Sandwich Generation is a generation of people (usually in their 40s to 60s) who care for their aging parents while supporting their own children. Due to rapid economic growth in the post-war years, the cost of living has outstripped what many of the elderly may have planned for in savings or CPF. In addition, retirement planning was not something most elderly people focused on in their working days as they were preoccupied with earning enough money to survive on a day-to-day basis or choosing to spend available funds on their children’s studies in hopes of giving them better lives.
Being an Asian society, caring for our parents is expected of most adult children and filial piety plays a huge role in shaping how we view the care of our elderly. Add to that, the shrinking birth rate and increasing life expectancy (source: Straitstimes, 2019), and we’re looking at elderly parents who (thankfully!) are living longer, but supported by fewer children than in past generations.
Raising a family in Singapore is an expensive endeavour. Not only do parents have to feed, clothe and shelter their children, they also have to shoulder the (increasingly exorbitant) cost of childcare, tuition and the many extracurricular activities today’s kids take part in.
With the twin financial pressures of supporting both old and young, it’s easy for the sandwich generation to neglect their own retirement planning. This means that one day, when you are older and retired, the burden of caring for you might end up getting passed on to your children. Don’t you want to give you children a head-start?
In recent studies, only 1 in 5 Singaporean youth (source: Straitstimes, 2018) believed their parents had enough savings to fund their retirement, while about 2 in 3 parents expected to outlive their savings. Another study (source: Todayonline, 2019) found that only 8% of young people today were confident of having enough to financially support their retired parents in future. The same study found that 70% were sure they would need to downgrade their lifestyle in order to care for their parents and 47% were financially unprepared to provide for their parents in the event of unforeseen events.
Source: Todayonline, 2019
The sandwich generation of today needs, more than ever, to be smart in choosing retirement products that will work within their financial constraints, to grow their savings to support themselves and the lifestyles they want to live in their golden years.
So what does it take for you to manage your current finances and still build a good nest egg? Here are 6 tips!
1. Make smart choices in your everyday life. Check out value deals and cut down on indulgences.
2. Arm yourself with financial literacy and instil it into your kids so that they understand the value of your hard-earned money and learn to appreciate value by ensuring they get the best deals.
3. Plan for your retirement now and break the cycle of sandwich generations by supporting yourself in your old age, thereby relieving your children of the burden of doing so. Look at annuity plans which allows you to make regular payments over a fixed duration while you are still employed. You get a monthly payout when the annuity plans matures, till you die. CPF Life is a good form of annuity plan.
4. Ensure you and your family lead healthy lifestyles with a good diet and adequate exercise, and are sufficiently covered with health insurance so that you’re protected from sudden health-related costs.
5. Teach your parents to identify scams so that they don’t get cheated of their hard-earned money.
6. Don’t feel guilty about saying no to your kids and parents. It will be beneficial for the family in the long run.