A recent research study carried out by Legal & General has revealed the financial pressures faced by some “midlifers”.

Midlifers are the cohort of people aged between 40 and 60. An increasing number of them are, to a greater or lesser extent, financially supporting the generation above them – their parents – and the generation below them – their children. 

You may well have heard of people in this position being referred to as the “sandwich generation”.

Read on to find out about some of the financial issues flagged up in the research, and how financial planning can be a key factor in helping midlifers manage the situation they often find themselves in.

Research reveals the financial cost to midlifers

The Legal & General research reveals that 17% of midlifers provide financial support to other adults, and that the cost of that support totals £10 billion a year.

The findings identify that age 45 is when you’re likely to have the greatest level of responsibility in terms of providing financial support to other family members.

After that, age 58 is the optimum age for taking on care costs for your parents.

Drilling down further, the research outlined the actual cost in terms of average monthly financial commitment: 

• Financial support for grown-up children averages £247 a month
• Support for elderly relatives averages £282 a month.

So, if you’re in the position of having to support both elderly relatives and children at the same time, the average monthly cost to you would be over £500.

Two key reasons for the increased financial pressure on midlifers

Two of the key factors that are driving the rising cost to midlifers have been:

• Dramatic advances in medical technology increasing longevity and resulting in people living longer with illnesses that would previously have been terminal
• The prohibitive cost of getting on the housing ladder meaning grown-up children are living with their parents for longer than before. According to a Halifax study reported in the Guardian, the average age of first-time buyers has increased from 29 to 32 in the last decade.

This means that you may find yourself with both your parents and children being financially dependent on you to some extent.

Midlifers are facing financial challenges

Wanting to provide financial support to family members is a perfectly rational emotion. There will be the inevitable, and equally understandable, temptation to put their needs above your own, with the knock-on effect of this harming your financial future.

As you’ve read, the research identifies 40 as the age when you become a midlifer. And, although your retirement seems a long way off, it’s also the age when you’re likely to start forming outline plans in your mind about what you might want to do in the future.

If you start overstretching yourself and diverting too many financial resources away from your retirement funding, you could well be affecting your own future financial prosperity.

That’s where financial planning can help you if you find yourself in this position.

Financial planning for your children

The financial commitment you make for your children will clearly depend on several known factors such as their age, and educational plans if they are still at school.

The earlier you start the planning process the better, as you’ll have more time to save and invest in order to build a decent-sized fund to support them. Starting at birth gives you 18 years’ worth of saving tax-efficiently into a Junior ISA (JISA), for example.

It’s important not to lose sight of your other financial priorities, and only set aside money you can realistically afford.

The financial support you give them once they’ve left university and started work will clearly depend on their and your individual circumstances and future plans.

Financial planning for your parents

Even if they are currently in good health and living independent and rewarding lifestyles, it’s always worth having a conversation with your parents, or other elderly relatives, regarding their financial position.

Clearly, conversations about money with family members can be awkward, but it’s highly possible you’ll actually find that they welcome the opportunity to share their plans, plus any concerns they may have been harbouring.

By starting the dialogue, you can start covering off some of the key issues and put yourself in a stronger position to be able to plan ahead.

Some of the issues for you to be aware of include:

• Are their financial affairs well organised?
• Do they have plans to move home?
• What pension arrangements do they have?
• Do they have other savings and investments, such as ISAs and shares?
•  Are they likely to have an Inheritance Tax liability?
•  Do they have up-to-date wills and Powers of Attorney in place?

Using these details as a starting point, you can start getting an idea of their future needs and how much financial support you may need to provide. 

Financial advice could be invaluable if you’re a midlifer

If you’re in the position of being a midlifer and financially supporting two generations of your family – or may well be in the near future – then financial planning is essential.

Here are five good reasons why having a robust financial plan in place will be invaluable if you’re a midlifer:

1. A detailed plan will give you a holistic overview of your finances to ensure you’re able to prioritise your commitments and plan ahead.

2. You’ll be aware of future potential challenges and be able to manage your finances to meet the demands as they occur, without jeopardising your future financial security.

3. Working with an experienced financial planner will give you invaluable insight into the most tax-efficient ways to save money to provide future financial support to your family.

4. By reviewing your plan annually, you’ll be able to ensure you’re on the right financial track. Part of the planning and review process will involve detailed cashflow forecasting so you can see how potential future events could affect your financial security. 

5. You'll get valuable peace of mind and face the future with confidence knowing you have plans in place. 

Financial planning can help you get the most out of your money and time.

Get in touch

If you have any queries regarding anything you’ve read in this article, or need some guidance, do please get in touch.

You can email me at graeme@macfp.co.uk or call me on 01349 832849.