Sandwich generation


Not having enough money for retirement is the biggest concern

Average life expectancy has generally been increasing, and for the ‘sandwich’ generation, saving for their retirement is clearly a big concern – and with plans to contribute financially to support their children and parents, it’s perhaps no wonder.

In a survey from the Association of Investment Companies[1], the sandwich generation aged 35–55 who have elderly parents and children – and a minimum household income of £50k – found that half (49%) said not having enough money for retirement was their biggest financial concern. This was followed by their children’s school/university fees (36%) and not being able to help family members financially (23%).

Saving for retirement

Three quarters (75%) of people interviewed said they had either a final salary, defined benefit pension or a defined contribution pension from their employer, and 47% said they had a personal defined contribution pension and/or a Self-Invested Personal Pension (SIPP) arranged individually. Whilst having this pension provision, nearly half (48%) of people said they still expect any money they currently have saved outside their pension to be used for retirement.

Research revealed that, on average, the sandwich generation are planning to save £419,248 for retirement, with one fifth (21%) of those surveyed said they were planning on saving between £250,001 and £500,000 for their retirement. On average, men are planning to save over £100,000 more than women for their retirement –£463,922 in comparison to £361,329. Interestingly, a quarter (25%) said they didn’t know how much they were planning to save.

Financial contributions

Unfortunately, it’s not just their own retirement that the sandwich generation are concerned about when it comes to their finances. Nearly a third (31%) of people said they were currently contributing financially to support their child/children after they finished school, and a further 46% were planning to contribute. The average amount the sandwich generation expect to contribute is £40,088, although almost half (46%) think their children will be better off financially when they reach their age.

While half (52%) of those surveyed aren’t planning or currently contributing financially to help their parents or parents-in-law, those who are (34%) said the average amount they expect to contribute is £18,378, which would go towards bills or expenses, medical expenses, and/or a retirement home.

Saving habits

When it came to their saving habits, an overwhelming number (66%) said they use a cash savings account and/or a Cash ISA (59%) to save money, with a Stocks & Shares ISA the third most popular choice (35%).

While most (50%) expect any savings (excluding pension savings) they have to be used for ‘a rainy day’, retirement (48%) was the second most popular option followed by a holiday (42%) and property (32%). Of those who have money saved, their 20s and 30s were the most popular age groups for when they first started saving, but a quarter (25%) have been saving since childhood.

Financial market

When asked what they would invest in if they had money to put aside for ten years and could only invest in one thing, property came out on top (44%), followed by stocks and shares (27%). 49% of people said they felt confident about investing in the financial market, but men are considerably more confident about this than women (60% versus 36%).

Personalised holistic approach to assessing your needs

We’ll help you plan ahead for your retirement, allowing you to focus on what’s most important to you. Retirement planning isn’t just about building a portfolio. We take a personalised holistic approach to assessing your needs, which allows us to provide you with long-term bespoke solutions. To review your situation, please contact Abacus Advice on 01732 881188 or email info@aaltd.co.uk.

A PENSION IS A LONG-TERM INVESTMENT. THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

PENSIONS ARE NOT NORMALLY ACCESSIBLE UNTIL AGE 55. YOUR PENSION INCOME COULD ALSO BE AFFECTED BY INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS. THE TAX IMPLICATIONS OF PENSION WITHDRAWALS WILL BE BASED ON YOUR INDIVIDUAL CIRCUMSTANCES, TAX LEGISLATION AND REGULATION, WHICH ARE SUBJECT TO CHANGE IN THE FUTURE.

THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED.

PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.

Source data:

[1] The sandwich generation research was conducted by Opinium from 22 August to 5 September 2017 amongst 2,011 UK parents aged 35–55, who have a minimum household income of £50k, at least one parent/parent-in-law living and who have or would consider having a Stocks & Shares ISA.