Advice for the sandwich generation
1. a generation of people responsible both for bringing up their own children and for the care of their ageing parents.
Put your own well-being first
Are you approaching retirement, with both elderly parents and dependent children? You may be feeling financial pressure. Or you’re time-poor and stressed.
It’s vital to put your own well-being first.
The Sandwich Generation is growing in astonishing numbers, thanks to both growing life expectancy and rising house prices. Did you know that there are more than 1.5 million ‘sandwich carers’ in Australia today? Yes, that’s a whole lot of people juggling dual responsibilities.
And although many do what they need to without a second thought, they usually don’t have it easy. The job comes with incredible financial and emotional strain that can take a toll on families.
More than physical and emotional care…
It’s financial, too. According to a study by the University of Adelaide for the Productive Ageing Centre, sandwich generation carers are often providing financial support as well as their time and care. On average, around a third of those surveyed have handed over payments of more than $10,000 to family members needing support.
And you may want to help your children (have you heard of the KIPPERS – Kids in Parents’ Pockets Eroding Retirement Savings?) … and you want to help your parents pay aged care bills, but it’s important to ensure you don’t end up facing financial hardship in the future.
Here are just a few issues faced by the sandwich generation, and steps to take to safeguard your financial future.
Where to draw the line – how to ensure your financial security
While you may want to help your family members, it’s important you have security yourself before you help others. You’re not going to be much use to your children or your parents, if you can’t support yourself effectively.
If you loan or gift money to your children now, whether for a wedding or home deposit, you may be giving up the assets or savings you need for a secure retirement income.
It’s also important to remember that your children can easily get into the habit of relying on the Bank of Mum & Dad, giving them a sense of financial security that will always be there for them. When the time comes for you to use your money or assets in a different way, by selling an investment property where your child has been living for example, they may struggle to start paying their own rent or to find the money to put a deposit down on their own home.
What financial goals should I prioritise?
If you’re approaching retirement, debt and mortgage reduction is often an important goal. Having a large balance remaining on your home loan can mean making earlier withdrawals from your super to keep up with repayments or to pay off the loan completely. And that can take a big chunk from your retirement savings at a time when you want to keep them invested to earn compound returns and maximise your potential for having enough income to last throughout retirement.
Don’t take it for granted…
… that you’re always going to have enough for your own needs. When are you going to retire? What sort of income will you need? What assets do you have? How much super have you invested? It may be possible to make regular, or one off payments to family, but it’s a good idea to make sure you are armed with as much knowledge and education about your financial health, so you can enjoy a secure financial future when you’re no longer earning a salary.
My time and finances are stretched… I need advice and support
Whether you’re supporting family out of affection or a sense of duty, there are likely to be a lot of complex issues, emotions and relationships involved. A MoneyLink financial planner can act as an intermediary to support you in your discussions and present your options in a more objective way. If providing for yourself and your family are equally important goals, a planner can help you look at ways to achieve one without sacrificing the other.
Many in the sandwich generation report high levels of stress, which takes a toll not only on personal relationships, but also their own well being. It’s important to recognise the importance of addressing stress and managing it in healthy ways.
If you are supporting elderly parents and your children, and would like some help and options, contact MoneyLink Financial Planning today.
MoneyLink Financial Planning Pty Ltd is an Australian Financial Services Licence Holder. No:.247360
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