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The advice needs of the 'sandwich' generation

Debra Hale, 11 March 2019

Some of your clients are wedged in the middle of family lines, providing for both children and parents. What pressures do they face, and how can you help?

Family in garden

My partner recently asked me what I meant by a sandwich generation. Was it because us middle aged folk were brought up on sandwiches, he asked. It made me laugh but he has a point. I have fond memories of tinned salmon sandwiches on a Saturday and sugar sandwiches on Wednesdays.

It’s not about sandwiches of course; the ‘sandwich generation’ refers to those stuck in the middle of their family line, typically looking after their children and grandchildren whilst also caring for older parents and, in some cases, grandparents. 

As a fully-fledged member of this demographic cohort I find much to relate to. I am the jam sandwich – the one who picks up the childcare baton, often spoiling my granddaughters with treats and sleepovers. I am also the ‘BLT’ of the family – the go-to for ‘best lender terms’ or, as I prefer to label it, ‘big life treats’. I’ve helped my children out many times with financial commitments such as weddings, house deposits and holidays. 

My family is a modern extended family, affected as many are by relationship adjustments and natural expansion of the generations. Longevity plays a big part – my granddad died last year aged 102 and his main carers were my aunts, all aged 70 plus. My mother is a fairly young baby boomer. But as the eldest of four sisters I am starting to feel a shift in the care responsibility and it’s not boding well for my retirement fund. 

So the ‘sandwichers’ are in a bit of a pickle.

Domestic care

A YouGov poll in 2012 showed there are around 2.4 million ‘sandwich’ carers in the UK. That number is on the rise as more of us live longer and the generations expand. There are other contributing factors, such as women putting careers first and having children later in life.

Children are living at home for longer, held back by university fees, shifts in working patterns, lower incomes, and a struggle to get on the housing ladder.

Almost a fifth of 45 to 60-year-olds are actively supporting their parents while their children are still living at home. This creates a huge reliance on this generation and can put enormous strain on the family, both emotionally and financially. Women are most likely to be the main carers in these situations, bearing the brunt of that domestic care burden. 

There are many positives for this multi-generational layered approach to family life. Looking after our loved ones is rewarding and can strengthen the family unit. The downsides can be difficult to manage though. Women are more likely to give up work to take on care responsibilities and I can think of two friends in my close circle that gave up work in their 50s to look after parents with dementia.

Legacy release 

The bank of mum and dad has evolved to a ‘club sandwich’ generation of retirees, and research suggests families are being bankrolled to the tune of £4,000 a year. 

A 2018 study found that retirees are supporting an average of three family members and expect to hand out an average of £360 a month to their children, grandchildren and parents. Women came off worse again, according to the research by Prudential, as they tend to give away an extra £25 to family members than men. 

Another piece of research, by Legal & General, suggests parents now help fund 25% of house purchases, lending more than £6.5 billion to get our youngsters onto the housing ladder. 

Of course, with so much of the wealth held by the over 50s in the UK, it makes sense that we step in and help our families whilst we can.

The current retired generation have made good with the property boom, ISA accumulation and many have admirable pension pots. Their children and grandchildren may not have the same opportunities and so there is an expectation the sandwich crew will help out financially.

Inheritance pots are likely to be depleted as more people in retirement release their legacies to their loved ones whilst they are still around to see them enjoy it.

Health risks

Nowadays, younger family members are more likely to have a Mexican bean wrap than a cheese and onion roll; eating habits have changed for the better.

Sadly, a member of the sandwich generation is probably not as healthy as their grandchildren, so the future care burden on both the family and on the state is growing. 

There is a lot of responsibility on the sandwich generation’s shoulders so it’s crucial that health risks are considered when they seek financial advice. 

Consider also the needs of their extended family, protecting their assets and their end of life costs; there is much to be said for a plan B for many of these scenarios in the form of a protection underpin. 

Talking to them about longer-term solutions like whole-of-life or convertible term policies and taking advantage of guaranteed insurability options can be prudent too. 

Zurich’s personal protection policy offers many features that could help: milestone benefit, fracture cover, comprehensive critical illness cover, child’s conversion option and online trusts, to name a few. The cover is flexible too: cover can be dialled up or down and benefits added or removed as family situations change.

Understanding the different life stages and experiences that an average UK family can go through these days is also really important.

For many financial advisers, involving the family in their client’s financial planning is a wise decision. Building in other elements to the protection solution, such as trust planning or setting up a will and lasting power of attorney, will more likely result in higher client retention, not just for now but in the future, in turn resulting in a truly client focussed business embedded with value. 

So whether you prefer an avocado and prawn wrap or a good old fashioned corned beef doorstep, give the sandwich generation a cheer for all they do and ultimately make sure that their BLT legacy is protected and well preserved.

Debra Hale is a protection specialist at Zurich