With rising life expectancies and low fertility rates, Singapore’s sandwich generation faces financial challenges in balancing the needs of their children and aging parents.
SINGAPORE: With low fertility rates and longer life expectancies, Singapore’s population is ageing rapidly. According to an annual report by the National Population and Talent Division on Tuesday (Sep 27), one in four Singaporeans will be aged 65 and above by 2030. The proportion of the citizen population aged 65 and above is rising at a faster pace compared to the last decade.
For those taking care of elderly people and young children—the sandwich generation—this responsibility can strain finances. CNA speaks to experts to learn how they can better manage their resources.
What is a Sandwich Generation?
Individuals in the sandwich generation are tasked with caring for both their children and their elderly parents. This role encompasses emotional and physical support for the young ones, alongside financial support and daily task assistance for their parents.
“The pressure on this generation, typically those between 35 and 59, is significant due to their diverse roles and obligations that encompass financial, physical, and psycho-social care,” Ms. Ang Bee Lian, director-general of social welfare at the Ministry of Social and Family Development, noted in a letter in 2015. People in this group often find their finances spread thin as they save for retirement, fund their children’s futures, and support their parents.
How Do You Allocate Your Resources?
Ms. Mabel Tan, a financial services director at Great Eastern and a member of the sandwich generation herself, faces similar challenges. With her son born with a congenital condition requiring open-heart surgery, alongside caring for her retired parents, she understands the financial strain firsthand.
Speaking on CNA’s Money Talks podcast, she emphasized the importance of resource allocation: “The proper allocation with clarity will actually help us get ourselves towards where we want to be.”
Mr. Tan Chin Yu, a senior client adviser at Providend, echoed this sentiment, highlighting the necessity of proper planning and prioritization. He suggests saving about 20% of net income while recognizing the need for families to set aside enough cash for short-term liquidity—ideally enough to cover three to six months of expenses, or up to a year for those with irregular incomes.
“Different people have different resources,” he said, encouraging families to assess their means to support their children and parents while also planning for their retirement.
What If Something Unexpected Happens?
Unforeseen circumstances, such as a child or parent falling seriously ill, can further strain the sandwich generation financially. Ms. Tan recounted a personal experience when her father fell ill but did not inform her, leading to unexpected hospital bills.
She stresses that communicating health issues early allows families to plan better. As a preventive measure, she advises plugging potential gaps while parents are still healthy, including securing healthcare insurance for them.
Mr. Tan emphasized that reallocating resources may be necessary when emergencies arise. “You probably need to tap on some of those future resources and think about how you want to replenish them,” he noted. Some families may consider creating a medical sinking fund of around S$200,000 to S$500,000 to cover potential private medical expenses.
Talking About Money
Discussions about finances can be awkward and even considered taboo in many families. Ms. Tan believes that open communication is crucial. “I want them to live long and well. And by living long and well, there are ways to ensure you have the confidence to enjoy the life you intended,” she explained.
Mr. Tan added that starting conversations with oneself can ease discussions about resources. “It’s always about trade-offs,” he noted. “I think it’s useful to get everyone on the same page regarding our priorities.”
How Can You Get Help?
Ms. Tan mentioned that many people in the sandwich generation feel “very stressed out” about their situation. Fortunately, Singaporeans are insured through MediShield Life, which heavily subsidizes hospital bills.
“The good thing to note is that more and more people in the sandwich generation are embracing financial planning and speaking to a trusted adviser to sort things out,” she added. For those considering investments, it would be wise to create a diversified portfolio of equities and bonds, as Mr. Tan suggested.
