The sandwich generation

Are you a member of the sandwich generation?

Do you have ageing parents that you support while also caring for dependent children?

Well, you are not alone! It is estimated that more than 1.5 million Australians are in your position, and the number is undoubtedly rising. Our ageing population and the increased rate of delayed parenthood have created this ever-growing statistic.

We understand your desire to support your family and we know there are many emotional factors that can influence your decisions.

However, overextending your finances today can generate many more challenges in your future and lead to your family’s next generation being in a similar position in the years to come.

Consider your own situation first

Consider your own situation first

Right now, you may have assets that enable you to offer some financial support to your elderly parents. Or you might consider dipping into savings to help your children with a wedding or deposit for a house. Of course, your heart is telling you to do it… but you need to think about your overall financial position and your goals for the future, first.

Every dollar given away today could impact your own financial security in your retirement years, and perpetuating financial instability is the last thing you want to do. Taking funds out of your superannuation savings or investments can have a dramatic effect on the compound interest which will maximise your likelihood of having enough income to last throughout retirement.

It’s important to be realistic about your own needs before over-committing yourself. Consider the amount of income you will require once you are no longer working. How much super do you have? What about your other assets? Being clear about your position will help you recognise how much support you can offer without sacrificing your future.

Government services and entitlements

Government services and entitlements

To help reduce the load, make sure that elderly parents are receiving all their government entitlements. If they have been responsible for their own finances for many years, it’s possible that they are not aware of the most current benefits. Contacting Centrelink and reviewing the full range of entitlements could help ease some of the financial strain.

While you are going through the assessment process, it is also worth reviewing the carer allowance criteria. You may well be entitled to some financial support yourself.

Plus, there is a range of government-funded services available to older Australians. You might be able to access help at home, short-term care or other types of care via the My Aged Care website.

Insurance cover

Insurance cover

With our young clients there is often the belief that the ‘bank of mum and dad’ will bail them out if they fall ill or suffer an injury and can’t work… so they are less likely to take out insurance cover.

And while this may be the case, it can leave parents taking on a financial burden that can have a significant effect on their own financial situation and retirement plans. This can be exacerbated when there are grandchildren who also need ongoing care and financial support.

One approach some parents have taken is to purchase insurance cover on behalf of their adult children.

The children can be the life insured while the parent is the policy owner and pays for the insurance premiums.

If an insured event occurs the insurance proceeds will be paid to the parent, who can use them to make sure their children and grandchildren are looked after. This gives parents peace of mind that no matter what happens their loved ones will be provided for without detriment to their own financial situation.

Seek help from a professional

Seek help from a professional

We understand that these types of issues can be fuelled with emotion. Complex family finances can cause stress and unwanted conflict. If you find yourself unsure of how to move forward without jeopardising your own wealth, then we recommend contacting a financial planner for professional advice.

A third-party perspective can often ease some of the pressure and provide an objective solution. To find out how First Financial can help you, contact our team today.

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and how they choose ... with confidence and certainty.

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