Sound Financial Group Blog

Almost certainly as many in the ‘Sandwich Generation’ will confirm, however planning for such eventualities can be daunting...  

My blogs in recent times have focused on financial independence (retirement if you prefer) and the problems that many approaching or at retirement are experiencing with falling annuity rates, the high cost of index-linked pensions and volatile equity markets. However, I was surprised to read this week that the average age of a first-time buyer, who purchases a home without parental assistance, is now 37! So I’m writing a few words about a growing problem for those who find themselves being stretched financially by differing family demands.

We know from experience that many of our clients have assisted their children and grandchildren in getting their feet on the property ladder (and continue to do so) and this can be part of an overall exercise designed to reduce their estate value and in turn the potential Inheritance Tax liability. Many clients inform us that they like the idea of seeing their loved ones benefit from financial gifts and the pleasure of giving with a ‘warm hand’ rather than a cold one at some future point, i.e. their death, when such a gift may not be as beneficial. There is also the potential cost of private and/or further education, which as we know is getting more expensive with the added cost of tuition fees, as well as the desire to help with the cost of weddings, a first car (and the cost to insure it!), etc.  

However with their children struggling to be able to afford their own homes and perhaps starting out in life with debts, their parents requiring care as their mental and physical health deteriorates and the usual demands of daily life, it’s no wonder that many in this classic ‘sandwich generation’ are feeling the squeeze.

As Financial Planners it will come as no surprise that we encourage people who may be heading for such a scenario to make plans well in advance so as to consider how they may cope financially, to make any alterations to their financial plans and perhaps to deploy their money differently to cope with sudden demands upon it.

Like all things in life, if we plan, then we have a greater chance of achieving our desired outcome. It is difficult of course to plan for certain eventualities that are as yet unknown (will a parent need care for example and if so for how long and at what cost?), but it’s always best to have the resources in place to cope with financial demands, than not have them and then feel under even more pressure at a time when you are already being pulled in all directions. 

The Bank of Mum & Dad can come to the rescue of family members, but it needs to be well capitalised, willing to lend/give and above all solvent and it will only be so if the custodians of the bank’s assets have looked after their wealth and planned well for the future.

If you wish to discuss your own financial planning strategy or would just like a second opinion on your current arrangements, please contact us and take advantage of a no cost or obligation meeting.