OPINION: Avoiding the ‘sandwich generation’ blues

by |

Those planners who recognise that the over 50s are generating a whole new business division will capitalise on an undervalued market, argues Evergreen Advertising & Marketing MD Gill Walker.

Everyone knows that the population is getting older. The latest figures show that in June 2011 just over three million people were aged 65 years and over, representing 17.4% of the total population. This will rise to up to 23% by 2040.

One of the consequences of the GFC has been the increased participation of many older workers in the workforce, as they delay their retirement to better manage their finances. More and more people aged 65 years and over are staying on at work and by 2040, the number of Australian workers aged 55-plus will rise by nearly 50%.

Matters are made even more complex when you consider that some 2.6 million Australians aged 50-plus are also unpaid carers. The so called ‘sandwich generation’ are often working, supporting ageing, sick or disabled parents, assisting children who are studying, as well as paying off mortgages.

At a time when previous generations were winding down, boomers are highly likely to have increased demands on their financial and emotional resources. And although they are constantly being urged to save and plan for their retirement, they may not be in a financial position to do so to any great extent.

Women of the sandwich generation are also more likely to have a caring role. Current figures show the single largest group of primary carers are women aged between 45 and 54 years. Many are not working, without partners due to divorce or widowhood. They are consequently less financially secure and less able to plan effectively for retirement, often because they have reduced superannuation due to years out of the workforce caring for children and family.

Yet at some point, however, all carers will have to retire. According to ASFA, at least $32,511 savings per couple per annum is required for retiring in a modest lifestyle at home. That is still more than the current maximum annual Australian pension for a couple, $27,908.40.

The ASFA estimate for single retirement income is just over $22,500 per annum, again less than the pension. There is little provision made for additional considerations, such as carers’ own life choices: their own failing health might necessitate a complete rethink of their situation – such as placing their parents in a nursing home, or their own need for assisted living. All of this will need to be financed.

What can financial institutions do to assist the sandwich generation with these dilemmas? The answer is a great deal. Banks and planners can help boomers make informed decisions. This includes talking them through their financial options and offering impartial solutions.

Within the aged care landscape alone, guidance is needed to clarify the working of bonds, daily fees and costs for services, as well as government tax thresholds and allowances. Financial institutions can plug the gap between knowledge and disinformation, creating an environment of trust and credibility to steer decision makers through the complexities of this process.

There is also a golden (and hitherto unexplored) opportunity for packages specifically designed to assist boomers negotiate mortgage repayments and the additional costs of coping with the minefield of age care, medical and other expenses.

Another hitherto unexplored option is for financial experts to offer at home, after hours visits, greatly assisting carers who have limited opportunities to leave the house. Carers are usually time poor, and when facing aged care options, decisions frequently have to be made swiftly. It’s important that financial planners understand this, and respond quickly, offering in-depth advice concerning entitlements carers can access from government fact sheets offering quick comparisons of pros and cons tables – carers do not have time to mull over reams of documentation – so they can make informed decisions. (Some organisations – such as Melbourne’s Signpost – already offer this service.) This “sharing of secrets” is a way of showing empathy with customers that also demonstrates great capacity for growth.

Further opportunities exist in estate planning, retirement strategies in volatile markets, managing health costs, offering consolidated financial snapshots of balances and transactions, spending insights, identifying excess spending and managing debt. There is also, in these uncertain times, an unequalled opportunity to educate Boomers on building up their equity and savings to be more financially secure into the future through savings or bank deposits which attract interest.

Finally, for more financially stable boomers, the retirement years may be those in which they explore the feasibility of buying into a franchise, return to work part-time, or turn a hobby into a business venture. Again, such life-changing decisions will increasingly become part of financial institution portfolios. Those who recognise that the over 50s are generating a whole new business division will capitalise on an undervalued market.