Sandwich Generation squeezed on both sides
In the third of a five-part series of articles in conjunction with the Bermuda’s Demographic Challenge series, Bill Storie looks at Generation X.
Today we will discuss the 35 to 50-year-old age group. Commonly referred to as “Gen-X”. In Bermuda this age group numbers about 14,000 today and by the year 2026 will still have about the same total, government projections.
According to the Office of National Statistics (UK) people in this age group are the least happy, have the lowest levels of life satisfaction and the highest levels of anxiety.
In broad terms, this age group has three core concerns — money (especially debt), ageing parents and children still at home.
This cohort will typically be in the workforce and be earning an income — many will declare they are underpaid and deserve a raise, but the reality is that every week/month they do get paid. It may not be enough to cover their expenses but all things being equal they know that next week/month they will receive income again. Barring unforeseen circumstances such as loss of job or infirmity, they are certain of a regular income.
Nonetheless, they are carrying significant debt — mortgage, car, school or college fees and a higher-than-needed cost of living. They are always short at the end of the month and it is a burden on them. In most cases they own their own home (with mortgage) and have the ability to renovate or upgrade the accommodation as needs be. They are likely less well of than their parents were at the same age.
While they are conscious of the need for proper budgeting, their approach is to take care of expenses as they occur (including using credit cards to their fullest). They most likely do not have a full budget — far less written down and reviewed regularly. Forecasting income and expenses is futile in their minds because they don’t see their finances changing much over the next few years, so they skip the process. Forecasting for the long-term such as retirement is not high on their to-do list.
In other words, they are probably well behind in their long-term savings over and above their employment pension contributions. As such, the thought of retirement is perhaps the last thing on their minds. Their dream life in elderly years may be simply that — a dream.
Awareness that they should be saving more is one thing, but in their current financial condition it can seem impossible. Some degree of financial education about saving and investing would be welcome, but until they have the money to do so, their desire to learn is low.
Sometimes referred to as the Sandwich Generation, this cohort is wedged between children still at home (commonly referred to as “boomerangs” – “they just keep coming back”) and elderly parents. While the children will leave the nest eventually, the growing concern is that the elderly parents may be around for many years to come. The problem becomes that the Gen Xer is getting older as well, and the elderly parents are, in all likelihood, needing more care and attention.
The double concern is more time needing to be devoted to the elderly parents and more money especially for health insurance or healthcare costs. Hence in a tight budget scenario as it is currently, the Gen Xer is squeezed very heavily from all sides. There may be a need for time to be taken off work to look after the parents, which clearly causes stress and concern about keeping their job. Full-time daycare or institutionalised care may not be an option due to cost.
Children still at home
While they have every sympathy with the child/children still at home and would never throw them out, the Gen Xer is forced to cover much of the child’s expenses. They do not receive rent from the child but do pay their utilities, use of the family car, probably health insurance and their food bill. In a regular structure the child would be paying for all those items themselves.
Moreover the emotional issues of family life can be severely strained leading to arguments, mood swings and stress for all.
Ideas to consider
1. Financial literacy
This cohort, perhaps above any other should have knowledge about saving and investing. They have regular income and while a surplus at the end of the month may be elusive, nonetheless they should be seeking a better understanding of the money business. This includes a thorough knowledge of their employment pension — how it works, contributions, voluntary contributions, mutual fund selections etc.
Paying down debt is a noble ideal. Yet for many people it cannot be accomplished at this age. However, as they look forward a few years and especially looking further afield to their retirement years, the effort of paying down some debt now while income is regular will pay huge dividends in later life.
It’s perhaps time to chat with your employer about a promotion. Take more courses, improve your skill sets and become more willing to take on new tasks at work. It could pay off nicely.
Timeline advisory: Start your engines
• Bill Storie is CEO of The Olderhood Group Ltd, a Bermudian company and exclusive Bermuda partner of Career Partners International, with over 350 offices worldwide. He is also producer and host of The Ozone a weekly radio show on Magic 102.7FM. He can be reached on www.olderhoodgroup.com or Bill@olderhood.com