Financial issues of the Sandwich Generation – Ageing parents, growing kids: Report reveals Indian Sandwich Generation’s finance woes #IndiaFinance

60 per cent of India’s ‘sandwich generation’ is worried about future financial security, a new survey suggests.

Sandwich Generation is a term used to define individuals in the age group of 35-54 years, financially providing for two generations of dependants – growing kids and ageing parents. The term was coined in the late 20th century due to increased life spans and later childbearing ages.

The cycle of caring for both their parents and children primarily determines the Sandwich Generation’s financial decisions as well as their daily routine. A typical day in the life of a sandwich-generation individual may include taking their mother to the doctor in the morning, helping their child with school homework in the evening, negotiating an important deal at work, and making a quick run to the grocery store on the way home.

Edelweiss Life Insurance, in collaboration with YouGov, surveyed over 4,000 respondents from this generation across 12 major cities, including Delhi, Mumbai, Ahmedabad, Kolkata, Chennai, Kochi, and Chandigarh.

What the survey says

A significant 60 per cent of the respondents said that no matter how much they save or invest, it never feels enough for the future. Over 50 per cent of the sandwich generation participants expressed worry about running out of money.

This is, of course, not the first sandwich generation that India is witnessing, but the unique social and economic challenges set them apart. Heavy reliance on credit cards and loans, the increased cost of living, expensive healthcare and education, and a quest for a better living standard make it essentially tricky for this generation to navigate finances.

The future cost of kids’ education, future healthcare costs, lack of work-life balance, and declining health of parents are their top concerns. At the same time, they are taking family vacations and maintaining a good standard of living, even if it means stretching their resources. But this relentless dedication is leading many in the sandwich generation to burn through their income and savings, highlighted through high credit reliance and accessing investments earlier than planned.

For the Sandwich Generation, the top three short-term aspirations are taking their parents on a vacation and improving their current standard of living. In the long run, they aspire to provide for their children’s marriage, accumulate enough savings for retirement, and travel.

Life insurance, health insurance, mutual funds, equity, and bank FDs make for their most preferred financial instruments. But the survey also suggests that they end up accessing these investments ahead of time. Medical expenses emerged as the strongest reason for premature liquidation.

Essentially, the Sandwich Generation is caught in a constant tussle between providing for short-term aspirations and planning for long-term ones. This generation, while understanding the importance of longer-term aspirations, is also keen on providing a life of abundance to their children and ensuring that their parents don’t have to forego their desire or will to enjoy life through travel and a better standard of living.

They also want to ensure that critical needs are met, for which they are willing to develop high credit reliance and liquidate assets before they actually mature.

During the survey, the average monthly household income turned out to be between Rs 1,00,000 and Rs 2,50,000. The double responsibilities, however, make it difficult for the sandwich generation to enjoy the money.

43 per cent expressed that they can’t enjoy anything they buy because it feels like they are wasting money. The guilt stems from the feeling of not having enough, especially for future security.

Need for financial advisory

This constant feeling of inadequacy leads to ‘money dysmorphia,’ wherein despite resources, they feel financially unprepared and unable to breathe easy about their future.

What can help? Seeking financial advice – it may help them plan better and navigate a blend of emotional and financial strain.