How the sandwich generation can manage their competing financial responsibilities

Supporting loved ones can be one of the most rewarding things you can do with your wealth. 

Yet, when you have several generations depending on you at the same time, even the best of intentions can start to feel financially and emotionally demanding. 

This is the reality that many people in the “sandwich generation” face. 

You may find yourself helping your children while also supporting ageing parents, all while trying to protect your own long-term future. 

Several demographic and lifestyle changes mean this is becoming increasingly common.

Life expectancy is on the rise, and while this is positive, it also means families need to think more carefully about care and financial support later in life.

Data from the Office for National Statistics shows that there were around 1.4 million people in the sandwich generation in the UK between 2021 and 2023. 

If you are in this position, you likely already know how difficult it can be to balance your responsibilities.

Continue reading to learn more about the challenges facing the sandwich generation and some practical steps that could help you manage them. 

The “sandwich generation” describes people supporting both children and ageing parents

The term “sandwich generation” typically refers to people – often in their 30s to 50s – who provide practical or financial support to both their children and their elderly parents. 

This can create pressure on several different fronts. For instance, you might find yourself trying to manage:

• Mortgage payments and day-to-day household bills

• School or university costs

• Financial help for older relatives

• Saving and investing for your own retirement. 

When these priorities overlap, it can sometimes feel as though you push your long-term goals further down your list.

However, taking a proactive approach to your planning efforts could help you manage these responsibilities more effectively.

Belvedere Wealth could help you look at these commitments together, rather than in isolation, giving you a clear understanding of how supporting loved ones might affect your progress towards your milestones.

Protecting your financial security could safeguard your long-term future

When your family require support, it is entirely natural to put their needs before your own.

Yet, looking after your own financial wellbeing is essential, as if you become too stretched, it would ultimately be harder to continue supporting those who rely on you.

You may feel the need to reduce or even pause pension contributions while you help your children and parents financially. 

Even though this may ease some short-term pressure, it could only create challenges further down the line.

Pension contributions typically benefit from tax relief and long-term investment growth, so delaying or reducing them may affect your ability to reach your desired lifestyle when you stop working.

As such, it’s vital to continue prioritising your long-term security, as this could mean you’re in a stronger position to help those you care about.

At Belvedere, we could help you assess the level of support that is realistically sustainable. 

For example, cashflow planning could show how gifts, care costs, or reduced pension contributions might affect your future wealth and retirement plans.

Read more: How cashflow planning turns numbers into possibilities

Your income is vital for caring for loved ones, so it’s essential to protect it

If you are helping more than one generation, your income will likely be one of your most important assets.

Your salary may be helping to cover your household costs, support your children, and assist your elderly relatives.

If that income were to stop unexpectedly, it might be difficult to manage your responsibilities. 

As such, it’s worth thinking about how you would cope if illness or injury prevented you from working for an extended period of time. 

Income protection could provide regular payments if you’re unable to work due to illness, injury, or redundancy. This could help you continue covering essential expenses while you get back on your feet.

Meanwhile, critical illness cover typically provides a tax-free lump sum if you’re diagnosed with a condition covered by your provider.

This can give you more space to focus on recovery without the added pressure of financial worries.

An emergency fund can also act as an invaluable safety net during times of difficulty. A good rule of thumb is to hold between three and six months’ worth of essential household expenses in an easy access savings account.

If you have many people depending on you, it may be prudent to hold closer to 12 months’ worth. 

We could help you review your protection policies to align with your current responsibilities, ensuring your cover and emergency savings are suitable for those who depend on you.

Speaking to your parents about money could help you prepare for future responsibilities

Perhaps one of the more difficult aspects of being in the sandwich generation can be discussing money with your parents.

These conversations can feel awkward, especially if your elderly relatives are used to handling their finances independently. 

However, it’s vital to understand their position clearly, as this could help you prepare for any support they may need later.

Indeed, it might be useful to discuss:

• Their current sources of income

• Any savings, investments, or other assets they own

• Whether they are receiving all the benefits they’re entitled to

• Their wishes or plans for later-life care. 

Having these conversations sooner rather than later could help you understand whether they may need future financial support, and how you might factor this into your own plans.

Belvedere could help you approach these discussions from a financial planning perspective. For instance, if your parents are likely to need support with care costs later in life, we could help you understand how this might affect your own retirement plan. 

Read more: 6 in 10 over-45s are underestimating the cost of care by thousands of pounds

We could also help you consider whether your own later-life planning is robust enough to avoid placing similar pressure on your children in the future. 

Taking steps now – such as building savings for care costs or reviewing your estate plan – to reduce the likelihood of your children facing similar challenges could mean future generations are better supported while your financial future is protected.

To find out how we can support you, please fill in our online contact form, email us at enquiries@belvederewm.com, or give us a call at +44 (0)203 633 6603.

Please note

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028).

The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance. 

The tax implications of pension withdrawals will be based on your individual circumstances.

Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The Financial Conduct Authority does not regulate estate planning.