Members of the sandwich generation, those individuals in their 40s, 50s and 60s who are bringing up their own children while also providing care for their parents, face increased financial strain in the best of times. Pulled in many different directions, they are also trying to save for their own retirement during a critical period in their working life. In the current coronavirus crisis, the sandwich generation are facing additional challenges, with the pandemic impacting jobs, businesses, schools and home life. “It’s the perfect storm of financial, emotional and time pressure,” says Tony Clark, Head of Retirement Marketing at St. James's Place Wealth Management. “You might be in a senior role at work and have to juggle management responsibilities with the challenge of working from home.
Or you might have been furloughed from your current role and face the prospect of a cut in income. Added to this, there are concerns about the performance of your pension and other investments given recent stock market falls.” So, amid this ‘perfect storm’, what can members of the sandwich generation do? A financial adviser can help to work out your priorities and put a plan in place to build wealth for the future. In the meantime, here are some tips on how to support your parents and your children – while also taking care of yourself.
Whether your ageing parents live with you, by themselves or in a care home, this is an anxious time. And while money is never an easy topic to talk about, having a conversation will allow you to plan for this period of uncertainty more effectively. Do you have a clear understanding of your parents’ assets, income sources, living expenses and debts? Do they have life insurance or long-term care insurance? Are they claiming all the benefits they are entitled to? Involving a financial adviser at this point can remove emotion from the equation and restrict the discussion to the facts and figures – for example, if you need to adjust your financial plan due to a change in circumstances caused by the coronavirus crisis.
Talk to your parents about financial scams in order to help prevent them from falling victim to online or telephone fraud. Keep in regular contact (via phone or digitally) and make sure they’re aware that you’re happy to discuss any money concerns that they may have. And though it is a difficult subject, it’s important to check that your parents’ affairs are in order. Will creation and legacy planning will be front of mind for many people during this time of uncertainty, and it’s worth taking a look to make sure everything is up to date. Also note whether they’ve specified who can legally take control of their finances should they become unable to make decisions on their own.
Whether your children are younger and home from school, or older and back living at home after their university has closed, or they have been laid off from their job, they will likely need increased emotional – and possibly financial – support. Thinking about money as a family, rather than each generation trying to manage alone, is a great place to start, and has the added benefit of introducing younger generations to financial planning. Ask yourself: What are you currently paying for child-care or schooling? Are you saving for a child’s education, or to help with a first-home purchase? Are loans and gifts to your children being structured in the most flexible or tax-efficient way?
The impact of the coronavirus may change the answers to these questions, and a financial adviser can help you identify what to prioritise and how to adapt to current circumstances if needed – while still saving for the future. Pensions and Junior ISAs are great opportunities to give children a financial head start, and it’s worth contributing even in times of volatility. In the March Budget, the annual allowance for a Junior ISA was more than doubled to £9,000. A parent or guardian must set up the Junior ISA, but anyone can pay into it, and there is no tax to pay on any income or gains. And even small contributions into a child or young person’s pension can make a big difference over the long term.
Remember, to continue caring for your children and your parents, you need to take care of yourself. It can be tempting to try to predict the future, or react to events as they happen. Talking to a financial adviser can help you make a financial plan in a calm, rational way, rather than reacting to news stories or your own emotions. Putting the right plan in place will allow greater opportunities to build wealth over time – fulfilling your retirement plans while still supporting other generations. If you can, continue contributing to your own pension and savings. Sacrificing saving today could result in financial strain tomorrow.
In addition, life insurance and financial protection are relevant now more than ever – we may not like to think about death, serious illness and long-term sickness, but they’re especially important if others rely on you financially. Use your time in lockdown to give your budget a spring clean. Are there monthly costs that you could eliminate or reduce? Are you using available tax breaks? You may even find there is an opportunity to make the most of a fall in share prices and invest for the future. “When markets have dropped it can be a good time to save and invest,” Clark says. “It may seem counter-intuitive, but you are buying cheap stock.” Look after you and yours.
If you have any questions or concerns about intergenerational financial planning, just ask your St. James’s Place Partner. They’re there to help. The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested. The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances. Will writing involves the referral to a service that is separate and distinct to those offered by St. James's Place. Wills are not regulated by the Financial Conduct Authority.