The Sandwich Generation

A growing trend in South Africa has seen individuals referred to as the ‘Sandwich Generation,’ supporting both their children and their ageing parents financially.
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Written By: Jessica Woodruff   This generation are typically in their 30s and 40s and as study have shown, are unable to properly save for emergencies and retirement as a direct result of having two generations of dependants. A total of 39 percent of all working metropolitans have neither a pension fund or retirement annuity in this point in time. Findings in the 2015 Old Mutual Savings and Investment Monitor show this trend has slowly proliferated in the last five years. In fact, between 19 and 31 percent of working metropolitans in this category have admitted they are either in debt or have several overdue payments, compared to just 18 percent of the "Non-Sandwiched". This is not to say only the Sandwich Generation are under pressure, according to the Savings and Investment Monitor, 68 percent of the average South African's income is spent on Consumption and Living Expenses. A further 12 percent is spent on Debt, and only five percent of Medical Aid and Insurance, which is the lowest percentage in five years. A total of 41 percent of respondents say they save less than they had a year ago as well as the past five years. Respondent's saving percentile in 2010 was at 33 percent. Saving objectives and stokvels Data revealing parents actively saving for their children's education, home improvements and holidays has dropped significantly from 2011, with stats almost halving in some instances. The amount of respondents who relied on their children for financial support was at an all-time high of 41 percent and 55 percent of respondents predicted they would have to support their family and parents in the near future. An increasing amount of lower income respondents were joining not one, but many stokvels due to the inability to save on their own and the convenience of not having to sign forms and undergoes credit checks. Stokvels are more prominent around the R14 000 – R19 999 and R 40 000+ household income categories. Respondents who had joined a stokvel in the past year had grown by 13 percent in the last 12 months alone. The issue with stokvels is the inability to generate any real growth, says Old Mutual researcher manager, Lynette Nicholson. Nicholson further explained the importance of expert advice and education on financial planning, debt reduction and wealth creation. She was however pleased to see an increase respondent's awareness of their need to save and invest with 60 percent now contributing towards either pension or retirement funds, or both. Respondents were also more readily making use of share unit funds and investment vehicles with a growth of 12 percent in the past five years. "What these findings of the Savings and Investment Monitor highlight once again is the urgent need for greater financial knowledge and understanding in South Africa.”