The “Sandwich” generation is being financial squeezed after new research has found that more than half of over 55s financially support their children, grandchildren or ageing parents.
The latest analysis from over 50s experts SunLife has revealed that 51% of people in their 50s, 60s, 70s and 80s are financially supporting their children.
SunLife also found that more than one in 25 people aged 55 to 59 are financially supporting elderly parents.
The survey also discovered that men over 55 are more likely to be supporting family financially than women, with 57% saying they help either their children, grandchildren or parents or a combination of the three. This is compared to 47% of women who do the same.
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.”
In terms of age groups, those aged 55-59 are the most likely to be giving financial support to family, with 53% helping their children or grandchildren and 4% helping parents.
And it is those in their 50s who are struggling the most financially too; as 26% of those aged 55-59 say they are worse off than they expected to be at this time in their lives, compared to 21% of people in their 60s and 11% of those aged 70 or over.
Of those in their 50s who say they are worse off than they thought they’d be, most blame the rising cost of living and poor savings rates, but 21% say they are financially supporting their kids more than they had planned to, while 15% ended up having to financially support someone who was ill.
Commenting on this issue, Philip Wise, chartered financial planner for Informed Choice, said: “The sandwich generation has been created by increasing longevity, with many children having to support parents whose finances were not sufficiently resilient to cover the costs of unexpectedly long life. And, of course, the Bank of Mum and Dad never closes – with retired parents wanting to support children, often during a crisis, such as poor health or divorce.
“Financial plans need to recognise that money can only be spent once – if money is used to provide for elderly parents’ care, it won’t be there for your own care in later life. It’s essential for planners to ensure that clients are able to split their retirement resources so that they know what funds they need for themselves and what funds they can use to support their children and parents. We ensure that clients know what resources they need to provide for their own essential expenditure and what resources can be spent on a discretionary basis. Some of the discretionary funds can then be used to support children and parents.
“Technology allows us to show clients the effect of supporting children and parents, and we can see how this support increases the likelihood of retirement resources being exhausted. Cashflow forecasting enables clients to visualise the financial consequences for themselves of supporting family.”
Further reading on this topic: