Who Are The Sandwich Generation And Why Are They Struggling?
In any discussion about bread and butter concerns in Singapore, the struggles of the “sandwich generation” are inevitably mentioned. But who are these people and why are they struggling?
If you’re a working adult, financially responsible for your children and your elderly parents, then for better or for worse, you’re part of this group of people.
Having to care for one’s own children is nothing crazy—every parent is expected to support the children they bring into the world.
However, in Singapore, certain factors have led to a growth of the sandwich generation, working adults with elderly parents who are reliant on them for financial support.
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, and we’re looking at elderly parents who (thankfully!) are living longer, but supported by fewer children than in past generations.
Financial pressure from two generations of dependents
Increasing pressure – both financial and otherwise – is the key characteristic of the sandwich generation.
Raising a family in Singapore is an expensive endeavor. 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, not to mention the cost of taking the family for the odd meal out or vacation.
But supporting their own families is not the only financial challenge Singaporeans face. Today’s working adults are also largely responsible for supporting their aged parents in retirement.
With these pressures on household finances, dual-income households are on the rise. Juggling long working hours with demands on your time from both kids and aged parents is now a common problem.
For many families, the solution to this problem is to hire domestic helpers. These are typically the most convenient and affordable form of child- and elder-care, but unfortunately translates to even higher costs for the working parents.
So what does all this mean?
Unfortunately, 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 they are older and retired, the burden of caring for them might end up getting passed on to their children. And so the cycle continues.
Today’s youth (the sandwich generation Class of 2030, if you will) are concerned.
In recent studies, only 1 in 5 Singaporean youth believed their parents had enough savings to fund their retirement, while about 2 in 3 parents expected to outlive their savings. Another study 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.
If the youths of today wish to have families of their own in future, they will probably end up part of the sandwich generation if their own parents do not take action today by adequately preparing for retirement.
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.
What can you do about it?
If you’re a member of the sandwich generation, take comfort in the fact that you are not alone. There are still a few things you can do to make things better.
- Choose a family-friendly employer who understands the need for work-life balance and gives you the space to enjoy family time and recuperate from the daily stresses of being in the sandwich generation.
- Ensure you and your family lead healthy lifestyles, with a good diet and adequate exercise, as being physically and mentally healthy will give you the strength to deal with any challenges you encounter. Ensure they’re you and your family are adequately covered with health insurance so that you’re protected from sudden health-related costs.
- Make prudent choices in your everyday life, be it by forgoing expensive holiday destinations for more affordable options or cutting down on indulgences like meals out at restaurants.
- Instill financial literacy in your kids so that they understand the value of your hard-earned money and learn how to do things like comparing prices before buying.
- Teach your parents to identify scams so that they don’t get cheated of their retirement funds or your hard-earned money.
- Plan for your own 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.
- Don’t feel guilty about saying no. It’s only natural to feel a bit disappointed when you cannot fulfil your kids’ and parents’ every desire. But saying ‘no’ from time to time can actually be beneficial for the whole family in the long run.
Adequate retiring planning and budgeting are a must to ensure that you can take care of your own future and financial needs while continuing to support your dependants.
There are many products that can help you to do so, such as Income's Gro Cash Sure, an insurance savings plan that comes not only with a capital guarantee1 upon the end of premium term but also a lifetime of cash payouts up to 9.9%2 of the sum assured so you can continue to enjoy the things you love while you save. You may also have the option to choose between yearly or monthly cash benefits2, while remaining protected. This is on top of being able to choose your premium term of 5 or 10 years based on your lifestyle and financial goals.
Additionally, you can also accumulate wealth by appointing your loved one as a secondary insured3 so your policy can continue in the event of death of the insured.
Planning for retirement not only helps you cope, but also enables your child to break out of the cycle and pursue their own dreams instead of becoming yet another member of the sandwich generation. Learn more about how you can ensure you’re the last of your family’s sandwich generation here.
1 At the end of the premium term, if the policyholder did not cash in this policy and all premiums for this policy have been paid for, the guaranteed cash value for this policy is equal to total premiums paid, excluding premiums paid on riders. If the policyholder choose to cash in this policy partially, the sum assured after the partial cash payout cannot be less than the minimum sum assured limit or any other amount Income may tell the policyholder about. Income will use the new sum assured and reduced regular premium amount excluding premiums paid on riders to work out the guaranteed cash value (if any) from the policy entry date.
2 If the insured survives at the end of the premium term, and if all premiums for this policy have been paid for, Income will start paying the cash benefit at the end of the premium term. Income may pay a cash bonus on top of each cash benefit, by applying a bonus rate to the sum assured, and may include any loyalty bonus payable from the end of 20th policy year after the end of premium term. Income may or may not pay this cash bonus for each policy year. Each yearly cash benefit is 2% of the sum assured and the non-guaranteed cash bonus without loyalty bonus is 7.3% of your sum assured and with loyalty bonus is 7.9% of your sum assured (based on the assumption that the Life Participating Fund earns a long-term average return of 4.25% per annum). At an illustrated investment rate of return of 3.00% per annum, the non-guaranteed cash bonus without loyalty bonus is 4% of your sum assured and with loyalty bonus is 4.35% of your sum assured.
If the sum assured of the policy is at least $80,000, the yearly cash payouts can be received in monthly payments. Please refer to the policy contract for further details.
3 Only you as the policyholder (before the age of 65 years old), your spouse (before the age of 65 years old), or your child/ward (before the age of 18 years old) can be the secondary insured at the time you exercise this option. You can exercise this option to appoint a secondary insured no more than three times. Terms apply for the benefit. Please refer to the policy contract for further details.
This article is meant purely for informational purposes and should not be relied upon as financial advice. The precise terms, conditions and exclusions of any Income products mentioned are specified in their respective policy contracts. For customised advice to suit your specific needs, consult an Income insurance advisor. This advertisement has not been reviewed by the Monetary Authority of Singapore.
These policies are protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact Income or visit the GIA/LIA or SDIC websites (www.gia.org.sg or www.lia.org.sg or www.sdic.org. sg).