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Sandwich generation: How can those caring for the elderly and children take care of their finances?

Sandwich generation: How can those caring for the elderly and children take care of their finances?

A photo of a family in a park. (Photo: iStock/stockstudioX)

SINGAPORE: With low fertility rates and longer life expectancies, Singapore’s population is ageing rapidly.

According to an annual report by the National Population and Talent Division on Tuesday (Sep 27), one in four Singaporeans will be aged 65 and above by 2030. The proportion of the citizen population aged 65 and above is rising, and at a faster pace compared with the last decade.

For those taking care of elderly people and young children – the sandwich generation – doing so can put a strain on finances.

CNA speaks to experts to find out how they can better manage their resources.

What is a sandwich generation?

People who are classed as the sandwich generation find themselves taking care of their children while supporting their elderly parents.

This includes emotional and physical support for the young ones and possibly financial support and assistance with daily tasks for their parents.

“The pressure on this generation, typically those between 35 and 59, is great because of their roles, responsibilities and obligations for care that include the financial, physical and psycho-social aspects of the care,” Ms Ang Bee Lian, director-general of social welfare at the Ministry of Social and Family Development, wrote in a letter in 2015.

Such people normally have their finances split in many ways - saving for their own retirement, their children’s future, and taking care of their parents, among others.



Ms Mabel Tan, a financial services director at Great Eastern, is among those in the sandwich generation. Her son was born with a congenital condition and required open heart surgery. Her parents are retired and she provides for them.

Speaking to CNA’s Money Talks podcast, she said that she had to stop work because of her son’s situation. That period was “very straining”, she added. 

Everyone has finite resources, and how they are allocated is important, she said.

"The proper allocation with clarity will actually help us get ourselves towards where we want to be,” she added.

Mr Tan Chin Yu, a senior client adviser at Providend, said proper planning is needed and the correct priorities need to be set. About 20 per cent of a person's net income should be saved, he added.

“Different people have different resources and means, you want to look at your own resources to work out how much you need to support each one of them (parents and children) but also not forgetting you have your own retirement or needs to take care of,” said Mr Tan.

He said that families should be able to set aside enough cash for short-term liquidities, and that means having enough to cover about three to six months of expenses. That can go up to a year for those who are self-employed or those who have a "choppy" income.

Some people inevitably compromise on themselves, but that should not be the case, he said, adding that equal weight should be allocated to children, parents and savings.

There are also options when it comes to providing an education for their children. A "baseline education" is essential, said Ms Tan, adding that it does not have to be extravagant.

“My suggestion is that you might want to plan something that (is) probably a local degree course, if really resources are really tight,” said Ms Tan.

Providend's Mr Tan noted that there are also concerns about medical bills for elderly parents, especially those without medical insurance.

"For some, if they don't have adequate medical insurance, then they might see the possibility that they need to support their parents," he added.


Sometimes, unexpected things happen, such as a child or parent falling seriously ill. With the additional strain of medical bills, how can the sandwich generation cope?

Ms Tan’s father fell ill but did not want to tell her because he did not want to worry her. She only found out about it when she started seeing hospital bills being sent to her home.

She shared with her parents that telling her about it earlier would help her manage the situation better. Her dad subsequently had to undergo major surgery.

“Had I not known about it, I wouldn't then make time to ensure that all the resources are in place," she explained.

Ms Tan said that being able to make preparations beforehand gives those in the sandwich generation peace of mind because they can plan for contingencies.

She adds that it is important to “plug all the gaps” when elderly parents are still healthy. This includes getting healthcare insurance for them if they do not have any.

Providend's Mr Tan explained that some reallocation will need to be done when an emergency hits.

"You probably need to tap on some of those future resources and think about how you want to make them back again in the future – by saving more, compromising on your lifestyle, not spending as much in certain cases," he said.

Some people might also think about liquidating some assets to tackle short-term issues. 

For those without insurance, they might consider setting aside a "medical sinking fund" of about S$200,000 to S$500,000 if they want to seek private medical help.


Talking about money with family members can be difficult, and sometimes a taboo subject to a "certain extent", said Great Eastern's Ms Tan. Open communication is key.

"We have to explain to them (parents), that I want them to live long and well. And by living long and well, there are ways to help you ensure that you have the confidence to enjoy the life you intended to," she explained.

"Because by taking care of themselves, they can actually help me make things better," she added.

It can sometimes be awkward to talk to loved ones about resources and money, said Mr Tan.

“I feel that it’s easier when you start with yourself to sort of open up some of these things and probably be very practical about it. It's always about trade-offs, on the concept that there are finite resources.

"I think it’s always useful to get everyone on the same page to say that ‘okay, here are our priorities'," he said.


Ms Tan said most people in the sandwich generation feel "very stressed out" about their situation.

As for medical bills, every Singaporean is insured using MediShield Life, which means hospital bills are heavily subsidised.

"The good thing to note is that more and more people in the sandwich generation are embracing financial planning and speaking to a trusted adviser to sort things out," she added.

If people do invest, it will be prudent to put it into a diversified portfolio of equities and maybe some bonds, said Mr Tan.

"We will say we try to manage the risks from diversification," he added.

How a stressed-out sandwiched generation can manage its money better

Source: CNA/fh(mi)


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