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Advisors are inundated with demographic data, information and colloquialisms pertaining to various age groups. Think “baby boomers” and “millennials.” Those terms are helpful because they help advisors keep their demographic ducks in a row, but there’s more.
Here’s a newish one: the “sandwich generation.” Essentially, the sandwich generation is Gen X with a little latitude on the low end to include the oldest millennials. Or in simple terms, the sandwich generation is vernacular pertaining to folks in their 40s and 50s. Regardless of the terminology, that’s an age group advisors should be paying close attention because those clients have unique financial responsibilities.
Think about the sandwich crowd this way. Broadly speaking, baby boomers don’t have children to worry about in financial terms. Rather, they’re tending to themselves and their retirements. Add to that, many of the youngest millennials and the oldest Gen Zers are delaying marriage, let alone having kids. That is to say they’re tending to themselves as well.
The sandwich generation is in a much different boat. They’re old enough to have kids and still young enough to have living parents who may require attention – financial and otherwise. Those obligations make clear the reasons why advisors should emphasize this age group while developing strategies pertinent to this demographic’s distinct needs.
Seizing the Sandwich Opportunity
For advisors currently not paying much mind to the sandwich generation, think about it this way. Recent data from Pew Research indicates 54% of Americans in their 40s have at least one living parent that’s 65 or older and they also have at least one child that’s younger than 18 or one that’s older than 18 that they’re supporting financially.
“This dual role not only strains finances but can also affect emotional and physical well-being. As financial professionals, recognizing these pressures can be the first step in offering meaningful support,” according to Nationwide.
Having to support both kids and parents is a daunting task and can represent an obvious burden on important financial objectives, including retirement planning. That underscores the need for the sandwich generation to work with advisors and for advisors to be ready with strategies that are tailored to this cohort’s needs.
“You can help clients understand the importance of not neglecting retirement planning by continuing contributing to their retirement accounts and exploring options like catch-up contributions if they’re over 50,” adds Nationwide. “It can be helpful to remind them that a secure retirement plan provides long-term security not only for themselves, but also reduces potential future burdens on their children.”
Tips for Helping the Sandwich Generation
Strategies for helping the sandwich generation run the gamut from prosaic (think setting family budgets) to more sophisticated. The latter category can include life insurance and saving for long-term care needs for parents, among other items.
Some of the above is part of the broader, important conversation about estate planning. Another vital point for sandwich generation clients is tax benefit, some of which can be realized by claiming dependents or through expenses incurred while caring for parents.
“Knowing that a majority of the Sandwich Generation is either ‘very stressed’ or ‘somewhat stressed,’ about being able to afford family finances over the next 10 years, just being able to empathize and recognize this struggle can go a long way to build relationships with those clients,” concludes Nationwide. “By understanding the unique pressures of these clients sandwiched between two competing responsibilities, you can offer solutions that are not only practical but also empathetic as you consider not only your clients wants and needs, but their entire family unit.”
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