‘Sandwich Generation' dilutes investments for vacation, festivities; feels financially insecure

India's Sandwich Generation, individuals aged 35-54 supporting both parents and children, feels financially unprepared despite their efforts. A study finds high confidence in financial planning, yet many prematurely liquidate investments for essential and non-essential needs. Credit usage is prevalent for short-term needs, while long-term goals rely on financial returns and future income.

Focused on offering the best to their parents and children, India's Sandwich Generation feels unprepared for their own future.

A recent study by the Edelweiss Life Insurance shows that 60% of respondents agree, “no matter how much I save or invest, I feel like it's never enough for future.”

Over 50% agree with varying statements including worrying about running out of money , feeling always behind and like they are not doing well enough.

This generation's key aspirations are focused on child's future that include providing for education and marriage, healthcare needs of parents, and improving the family's standard of living.

They show reasonably high confidence in financial planning , with 94% saying that they either have a detailed plan or have undertaken some degree of planning.

Further, a majority also believes that their investments are linked to specific aspirations.

What is the Sandwich Generation?

A Sandwich Generation is defined as individuals in the age of 35 - 54 years who are financially providing for two generations of dependents. These dependents are their ageing parents, and growing children.

Edelweiss Life Insurance , in collaboration with YouGov, has surveyed 4,005 respondents in this generation across 12 cities to understand their attitudes, beliefs, and level of financial preparedness

Sandwich Generation prematurely liquidate investments

The report highlighted that across their top 5 preferred product categories – Life Insurance, Health Insurance Mutual Funds , Equities, and Bank FDs – less than 60% currently have active investments across categories.

Further, even fewer expect to persist with them over the next 1 – 2 years.

The study revealed that all these product categories have been prematurely liquidated, meaning accessed before their pre-defined goals were met.

While essential needs dictated this liquidation, non-critical needs like vacation, spending during festivities, and more also emerged as the drivers.

Sumit Rai, MD & CEO, Edelweiss Life Insurance said, “We have closely seen how Sandwich Generation is living in a cycle of caring for their parents and children. They want to enable the essentials like healthcare and education while providing an aspirational life where ‘needs' don't come at the cost of ‘wants.' This is primarily driving their financial decision making. And, in the process, they often end up relegating their own dreams to the background, leaving them feeling they are unprepared for the future.”

Use some form of credit to fund short-term needs

The report further revealed that said they use some form of credit to fund their short-term needs, while 49% savings.

Credit coupled with cash/income is allowing them to address critical needs like healthcare and education, but also providing them flexibility to meet non-critical needs like vacation, home renovation, etc.

For long-term aspirations, expect to rely on returns or gains from financial instruments , and 71% on regular future income.

It is interesting to note that this generation considers retirement among their top 3 long-term aspirations, a period wherein one stops receiving regular income.

Join the community of 2M+ industry professionals