There’s a growing population of middle-aged adults taking care of their children and their parents at the same time – this is the Sandwich Generation. In a new study, “Relieve the Squeeze: The Sandwich Generation,” released by Filene Research Institute, it stated, “The burden of supporting two generations at once can be financially draining.”
According to Stephanie Galligan, research manager for the Madison, Wis.-based think tank, 47% of the seven to ten million adults in the Sandwich Generation are between the ages of 40 and 59 years-old. And within that population, there are a lot of financial needs not being met by credit unions. “By recognizing the unique needs of this group, credit unions have an opportunity to help their members navigate the difficulties of supporting both parents and children,” said Galligan.
Galligan’s research found that, on average, those in the Sandwich Generation are spending $5000 each year on their adult children and another $5000 every year to help their parents pay for food, medication, and everyday living expenses. According to Galligan, 71% of those surveyed said that financially “they are at the tipping point and are having a hard time being able to pay for their own expenses, let alone saving. That’s an implication that I don’t think many average Americans can sustain.”
Galligan said credit unions should recognize some of the challenges faced by this generation. “This is a generation that’s saving less for retirement than the national average.” She stated, “They’re not saving for long-term finances for their children and there are levels of helping them to be able to make incremental financial improvements. Because once they start supporting a parent financially, they commit to do it, likely for the rest of that parent’s life.”
The report found four areas that credit union leaders should think about concerning the needs of the Sandwich Generation:
- Understand that the Sandwich Generation exists and what its needs are.
- Assess whether this segment exists within the consumer base they serve, or if there are consumers with similar needs.
- Decide whether this is a market segment that they can deliver on, and if so, how they can do so.
- Find ways to differentiate themselves from others that serve this segment.
Galligan’s findings in the study discovered that there’s a real lack of helpful conversations happening between credit unions and this population. “The conversations and education we were finding was typically a list of to-dos and a message of ‘put yourself first.’” She continued, “When you say to somebody to ‘put yourself first’ when it comes down to making sure that my mom has groceries or my child has groceries, or making sure that they have prescription medication – that’s just not a message that’s going to be helpful for them.”
The research also discovered that a vast majority of this population group are willing to go into personal debt to assist their adult children and parents. In her research, Galligan discovered an idea where credit unions could provide some real benefit for this group. “One thing that came up in the survey was this idea of flexible savings.” She said the survey found this group was not putting money into accounts, such as a 529 college savings account or other retirement accounts because they can’t afford to have money tied up.
“So, how do I put money in for retirement that’s not going to get tied up or how to I put money in for a 529 that’s not going to get tied up? At the same time, I don’t have this nest egg to help me or help anybody in my family,” she said. “I think there’s an opportunity for credit unions to help people and educate members to designate money for long-term but have it available if it’s needed in these emergencies.”
According to Galligan, the Sandwich Generation is in real need for financial planning services. “People aren’t going to stop caring for family and this generation is put in a tough position to need to talk to their parents about money, without taking away their parent’s dignity.”
Watch the exclusive CU Times online interview with Galligan here, as well as download the full report from Filene Research Institute.
