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Balancing act: Financial planning for the sandwich generation
What is the sandwich generation? If this term is new to you, let me explain it simply. If you are like me – a working adult with parents and children who depend on you and your spouse for financial support – then you are part of the sandwich generation.
Belonging to this group means that even as I am trying to save for my own retirement, I also have to help bear the expenses for my parents’ post-retirement years, along with my children’s childcare fees, food and everything else. With inflation at such a high rate these days, this certainly reduces my ability to save enough!
Supporting my parents
My parents were unable to prepare sufficiently for their retirement due to minimal financial education. They were afraid to invest, and mostly stored their hard-earned savings in bank accounts and fixed deposits. With the value of cash eroded by inflation, what they have to tide over their retirement years is definitely insufficient, especially with the average life expectancy in Singapore now at 84 years1.
After working so hard, the value of my parents’ savings is now much smaller than they originally thought. As a filial child, there is no way I can step aside and allow them to suffer when they are old. Instead, I try my best to tighten my budget, sacrificing my own needs to meet theirs. One way children can support parents in their retirement years is to make a cash top-up to their CPF accounts. Not only can this help you reduce how much income tax you pay, your parents also have more to spend during retirement2.
Having children
The cost of having children starts early with gynaecologist bills and preparing a nursery to welcome the new child. Once the nine months are over, depending on whether there is support at home, new parents may need to fork out a large sum of money for a confinement lady, or for the mother to rest at a confinement centre. The costs can vary from SGD2,800 for a basic package to SGD23,8003, 4 for a more luxurious experience.
Even before the end of the sixteen weeks of maternity leave (extended from 1 April 2025 under the new shared parental leave5 scheme) are up, parents would have already frantically tried to secure either a coveted place at a nearby infant care centre or hire an experienced nanny. This is another large expense that, even with government subsidies, most middle-income parents would still need to fork out – at several hundred dollars more every month.
Let's not forget that some children have lower immunity and are prone to falling sick. Based on my experience, this would mean a paediatrician bill ranging from SGD200 to SGD300, depending on the type and amount of medication they need. Additional leave taken to care for kids while they recover from illness may also eat into your salary.
That's just for the early years. What about the school fees and enrichment classes as they get older?
Personal choices and planning for the future
I consider myself privileged to have learned about financial planning from a young age, and knowing that I have things under control. My investments are in place to help me earn passive income. Even though my investment dividends may not be sufficient to cover all expenses, they are still valuable income. My investments can also potentially grow towards building my retirement nest egg.
At the same time, I am protected by various policies which I purchased earlier, including whole life, term life, critical illness, as well as personal accident and hospitalisation plans. To protect my two children, my husband and I have also conscientiously made a will. This ensures that they are both provided for and looked after by a guardian, in the remote chance, that both of us are gone before they are of legal age.
At the end of the day, choosing to have children is a personal choice. Even supporting our parents is a personal choice. Despite the financial burden, it is one which I gladly bear as my family is my greatest joy in life. Even though life is not easy, I sleep easy at night knowing that I have done my best financially as both a parent and a child.
3https://dollarsandsense.sg/much-cost-hire-confinement-nanny-singapore/
5https://www.madeforfamilies.gov.sg/parental-leave-and-benefits/shared-parental-leave
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