The sandwich generation: caught in the middle of financial goals and demands

The sandwich generation: caught in the middle of financial goals and demands

Last updated on 13th May, 2020 at 10:30 am

Nailing your finances is tough with an increasing cost of living paired with our personal financial responsibilities. The ‘sandwich generation’ is a term used to refer to the specific struggle facing South Africans who are responsible for caring for their parents and children financially. We explore how to alleviate this pressure to avoid feeling like an over-stretched ‘sandwicher’.

Understand if you’re a ‘sandwicher’

Since many South Africans are caring for their parents and children, it’s tough to make provision when it comes to saving sufficiently for retirement. As we approach the middle of the year, it’s never too late to consider how to ‘nail’ your finances, for the year or decade ahead.
When speaking to a financial planner, it’s important that you are transparent about your personal financial demands, i.e. your ‘sandwich position’. This equips your financial planner to give advice that is realistic in making provisions for yourself and your dual-care duties.
Madri Jacobs, a financial planner at Sanlam, says: “If you are a family member who provides for your children, parents and/or siblings and the wider family – this could include people in your employment, such as a domestic helper – the question is ‘How can I make this work?’ It’s vital to plan ahead and to have the meaningful conversations upfront.”

Jacobs says a typical scenario would be a working couple with children in primary school who are caring for a retired parent. The parent moves in to save on paying rates and taxes on an additional home, and assists with providing childcare for the children.
But this arrangement still puts strain on the couple’s retirement savings, especially as they assist with the parent’s medical expenses. This kind of situation isn’t an exception; it has become the norm. She adds that looking after the financial needs of three generations takes serious planning.
And when it comes to having the best chance of meeting financial obligations in the new year, there are multiple considerations to factor, including:

    1. Get very practical
      Determine the needs of your dependents, then look at how to finance these. Take your own needs into account as well! As an example, a bank could lend you money to pay for educational expenses, but a bank will not lend you money to provide income in your retirement. As advisers, we always caution clients against using their retirement savings to assist parents and children, since it will be almost impossible to make these up, due to the opportunity cost of compound interest and limits to one’s budget for future savings.


    1. Involve siblings in your financial planning discussions
      If you have siblings, chat to them about how to share the financial responsibility of looking after your parents. Have frank, loving conversations with your parents too. Sometimes arrangements can be made where you assist your parents but set up an agreement for repayment, e.g. out of their estate (given that funds are available). It is grim to think about it, but one should also look at it objectively. Having said this – ensure that all family members’ wills are up to date. If people are comfortable to do so, discuss the content of the wills to avoid surprises down-the-line.


  1. Draw up a family budget to nail your finances
    • Medical aid and gap cover for each family member: investigate whether a family plan is cheaper.
    • Short-term cover for vehicles and household contents: an unexpected claim could be the straw that breaks the camel’s back when your budget is already stretched; utilise insurance for extra protection.
    • Life cover: if you are the financial provider, other people are reliant on your income. If you should pass away this would put further strain on the family. Get professional assistance to determine a sufficient level of cover.
    • Provision for your children: ensure you’ve stipulated guardians for your children in your will and have enough life cover to care for them.
    • Lump sum disability and income protection: crucial ways to protect loved ones should you be unable to earn an income.
    • Provision for school fees: often, you receive your salary for December earlier in the month and it is a long stretch to receiving January’s salary. Set aside funds for school fees and other big obligations as soon as you receive your end-of-year income, or ideally, even earlier.
    • Provide for travel expenses to and from work: this is often forgotten but these small sums add up. Perhaps investigate alternatives like carpooling or public transport, if viable.
    • Limit debt, especially credit cards and short-term loans: be wary of the pitfalls of credit, including fees and high interest rates.
    • Get assistance with retirement and investment planning: your current situation may last many years, so you need to have a plan for it. An objective professional’s opinion may help.
    • Severe illness cover to supplement medical aid: this can be a good idea to bolster finances should a curveball occur.

For expert advice on making your money stretch so that you can provide for your personal future while caring for your loved ones, reach out to an expert financial planner.

Don’t forget to utilise our Wealth Sense portal to gain access to a wealth of knowledge in the form of expert-written articles on topics that are important to you, like financial planning, budgeting, investing, and much more.

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