Feeling the squeeze? Retirement tips for the Sandwich Generation

If ‘X’ marks the spot, for Generation X the ‘spot’ would be right in the middle of a range of financial pressure points. But for those in this so-called ‘Sandwich Generation’, you need to remember: in order to continue caring for your children and your parents, you must take care of yourself. Here’s how you can do so!

What does retirement mean to you? Whether it’s the freedom to travel the world or simply living comfortably and being able to treat the grandchildren, it’s unquestionably a time of life that we should be able to fully enjoy. Yet, while some of today’s retirees are able to do this, future generations might not be so lucky.

Born between 1965 and 1980, members of Generation X are often referred to as the ‘Sandwich Generation’, and for good reason. They’re caught between caring for their elderly parents, who are living longer and increasingly likely to need long-term care, and their adult children, who are struggling to get on the property ladder.

Gen Xers are therefore being squeezed financially from both sides – all while trying to plan for their own retirement. According to ONS statistics in 2019, 1.3m people fall into this category.1

A third of Gen Xers are at high risk of retiring with ‘minimal’ incomes, according to a recent report by the International Longevity Centre UK (ILC) – with more than half wanting to save more, but struggling to do so. More than six million members of Gen X expect to be worse off than their parents when they eventually retire.2

With this tsunami of financial pressures, it underlines the importance of a long-term plan.

Homeward bound

Two major factors mean that finances are pulled in different directions. Firstly, more young adults are returning home to live with their parents. Millennials, in practice, are finding it hard to get on the housing ladder, and research from Skipton Building Society found that about 2.7 million parents had grown-up offspring living at home at the end of 2018, with only 40% contributing financially.3 Not only that – elderly parents are increasingly moving in with their children, or require financial support in order to move into assisted living.

 An uncertain future

Gen Xers’ tricky situation is compounded by the fact that they formed the bulk of the workforce at a time when responsibility for long-term savings shifted from employers and the state to the individual – and are now paying the price.

Many of those currently aged between 41 and 56 have also found themselves caught in the middle (again) when it comes to pensions. They entered the workforce too late to receive Defined Benefit pensions (where the amount paid is based on the number of years spent with an employer and the salary earned), but too early to benefit from automatic enrolment in jobs they had at the time, as this only took effect in 2012.

Taken together, these factors explain why Gen Xers face a particular set of challenges in saving and planning for the future. Indeed, for many, the future – and their retirement – is a scary thought.

Almost a third of Gen Xers surveyed by the ILC said saving for retirement was low on their list of priorities, with 19% finding it hard to save regularly due to insecure incomes and outgoings. These difficulties have been exacerbated by the effects of the pandemic, during which more than half a million Gen Xers have been made redundant and 1.3m have seen their hours reduced.4

The importance of having a plan

All of this serves to underline the importance of knowing what to plan for and what your options are when circumstances or priorities invariably change. Proactive planning will also help reduce your financial stress if you are already supporting children and parents, or if you think you may be faced with this balancing act in the future.

This might include working for longer and delaying your retirement – but before that, it’s important to get a handle on what your savings are – it could be a mix of Defined Contribution and Defined Benefit pensions – and what you should be doing with them, even if you’re not ready to retire.

Perhaps the most obvious way to boost your retirement savings is to increase your pension contributions, especially if you’re in a workplace scheme where you benefit from both tax relief and employer contributions.

Improving your retirement savings doesn’t have to entail paying in more money, though. It could be that your current investments aren’t performing well enough, or that you could get better returns by reviewing your existing retirement pots to see if they could be working harder for you.

Taking the pressure off

Of course, no two members of Generation X are the same. Everyone’s goals and needs are different. But, for a growing number of people, retirement is likely to be marked by the impact of simultaneously caring for an elderly parent and their own children. With this broad theme of financial pressures coming from all directions, while still trying to fund your retirement yourself, it could be worth asking for help.

Working with a financial adviser to understand the options and map out a long-term plan can help take the pressure off. An adviser will ensure that any decisions you take in the shorter term are informed by and make sense in the context of your specific financial situation and wider life plans. They can see the big picture and take account of things like your risk appetite and capacity for loss, and can also offer longer term guidance – for example, on how your retirement planning is linked to estate planning.

Wherever you are on your financial journey, Wellesley is here to help. Just ask.

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.



1 ONS, ‘More than one in four sandwich carers report symptoms of mental ill-health’, January 2019
2,4 International Longevity Centre, “The Forgotten Generation? Retirement Income Prospects for Generation X”, November 2020, 6035 people surveyed
3 Research by Skipton Building Society, December 2018

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