The "Sandwich Generation"

In the course of my work I've met with people from various walks of life, and what draws my attention is this particular phenomenon of the "Sandwich Generation".

What is the "Sandwich Generation"?

It is "a generation of people who are caring for their aging parents while supporting their own children"(merriam-webster dictionary). What are the possible reasons behind this? Firstly, the longevity of people are increasing, which means that children will have to take care of their elderly parents well into their 80s or even 90s. Secondly, these children cannot wait too long to have their own kids - they need to start their own family say in their late 20s or early 30s. And there you have it, the perfect recipe for the "sandwich". Imagine the squeeze on the stuffing. Woah.


Why is financial planning important for the sandwich generation?

These people are in a financially precarious situation because the demand on financial resources on them are three-fold as they have to look after:

1) Themselves

2) Their children

3) Their aging parents

In fact, to put it simply, it'll just be two people taking care of - 8 people!
(Father, mother, father-in-law, mother-in-law, you, your spouse, your son, your daughter)

What are the pitfalls to look out for?

The pitfalls to look out for are:

1) Parental planning: if you find that you aren't spending much on your parents' maintenance now doesn't mean that you won't have to splurge on them in the future. The sobering fact is that the medical costs usually set in when they are getting older, and once it starts it can be VERY HEFTY. So to lighten your burden in the future, do ensure that all the necessary medical plans are in place. Eventually, can you afford to hire a helper to look after you parents when necessary, or are you going to DIY?


2) Children planning: you will find that spending a lot on your children is inevitable. But the point is this - if you do spend a lot, make sure that you are spending on the worthwhile things. One of the best thing you can buy for your child is his education fund. Unless you want to instill an entrepreneurial streak in Junior by having him/her work his/her way through University by flipping patties.

3) Self planning: Plan ahead for yourself so that you won't have to pass on the responsibility to the next generation. You'll rather them inherit money than debts right? Even if you don't want to leave them an inheritance - just don't deplete their savings. This can be a vicious cycle, so if you have the option to stop it, please do - and spare your child.

Is there ever a way to avoid this?

There are 4 possible ways I can think of:

1) Don't have a next generation.

2) Due to the filial piety clause this is being censored.

3) Share the responsibility of caring for the elderly parents among your siblings
(not applicable if you are an only child or prodigal son/daughter)

4) Chart your family course well so that you have kids when your parents are still young. Then you can focus more on you kids. When your kids are slightly grown up, then it'll be your parents turn to clamor for your attention.