Paying for a child’s education and welfare can be a great financial strain on parents. Young people may fail to realise that their parents need to be secure enough financially to retire and live comfortably.
We spoke to experts to find out how youth can assist their parents to save enough to secure their golden years.
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The unique challenges of the ‘sandwich’ generation
Alex Cook, CEO of GCI Wealth, and Elmar Esterhuizen, Managing Director of SFA, both make mention of the ‘sandwich’ generation. This term refers to people spanning 40 to 60 years of age, who have to provide for both their children and their elderly parents, thus being "sandwiched" between these two responsibilities. Esterhuizen describes these people as “the filling holding the two slices of the sandwich together.”
Cook notes that many people in this age group chose to have children later in life, in order to spend enough time on their careers. He also points out that tertiary education “lasts much longer than it used to”.
“Rising property and school costs mean that contributions from parents are often needed, along with practical help,” Cook says. “The overall result is young people find it harder to attain independence, and often require financial (and other) help much longer than what used to be the norm.”
A further factor noted by Cook is the increased longevity of our modern age. This can lead to retirement savings running out, which in turn means that elderly people might need financial assistance from their middle-aged children.
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What can millennials, and other youth, do to help?
Given that there is little that the sandwich generation can do to change the financial situation of their parents, the focus should shift to millennials taking responsibility for their own finances.
Esterhuizen suggests three steps that these, and other youth, can take to make this happen.
- Speak to a licensed financial advisor who can guide and mentor them.
- Prepare a budget and stick to their commitments.
- Implement a Financial Needs Analysis (FNA), to use as a financial manual.
By committing to these steps and becoming more independent, young people can relieve their parents of some financial burden.
Taking it a few steps further
Millennials who are committed to assisting in reducing their parents’ burden can go a few steps further by becoming actively involved in their parents’ financial planning.
Samkelo Zwane, Head of Product at FNB Wealth and Investment Management Solutions, mentions various actions that young people can take in order to help their parents. These are as follows.
- Having an open and transparent conversation with their parents about money
- Researching suitable retirement savings and income plans for their parents
- Helping their parents to develop a retirement budget
- Helping their parents devise ways to earn extra income
By offering this assistance, young people are not only reducing their share of their parents’ financial burden, but they are giving back to their parents who have long supported and cared for them.