Friday 26 August 2011

The Sandwich Generation in Singapore

The Economist has recently published an interesting article highlighting the relationship between age and happiness in a 1st world country like US. This happiness index is popularly known as the U bend of life. Look at the graph below and see if you are able to find any interesting observations?


Source: The Economist,  Dec 2010 edition

The 4 most common criteria people judge their level of happiness are namely, relationships, education, income and health.  The findings of the study are as follows:  Stress rises during the early 20s, worry peaks in middle age, sadness rises slightly in middle age, and falls thereafter.

As a financial planner,  I am particularly concerned about how personal finance play a part in determining the emotional well being of an individual.  It is no surprise that there is a strong correlation between financial well being and emotional well being.  I will highlight some of the financial issues facing a particular category of Singaporeans and how engaging a financial adviser can help alleviate some of the problems. 

Is our sandwich generation burdened mainly by financial issues?

The sandwich generation traditionally refers to Singaporeans aged 30 – 55 who are working  longer, harder and having to face steep expenses such as cost of children’s education and eldercare for their parents.  This phenomenon is a global trend affecting all developed countries as a result of rising longevity, declining fertility, children moving out of home later and rise in the cost of living.

The sandwich generation is characterized by high liabilities (Mortgage loan, car loan), high expenses (Household expenses/Annual vacations?) and high dependency (Caring for children and parents).  I often refer to this life stage as the high dependency period.

Many of the sandwiched working class constantly desire to be more successful in their careers, have more time with their spouses and loved ones, upgrade themselves continuously and care for their children and aging parents all at the same time.   Unfortunately, time has become a scarce resource in our society today, the constant changes in financial regulations, products and most importantly personal circumstances means it is unrealistic for the man in the street to be able to juggle all aspects of their finances well.   

For example, in the course of conducting reviews for my clients, I often come across many investment and insurance portfolios that look impressive on the onset, but will fall easily like a deck of cards when the slightest unexpected events happen.  Recently, I met a prospect who is a firm believer in protecting her income stream for her children in the event of premature death, she spends close to $1,000 a month in insurance premiums yet is still severely underinsured.  Another prospect, a university graduate in his 30s, has a monthly income of $4,500, however he is probably unable to retire at his desired age due to poor budgeting.  Obviously these are extreme examples, but it shows that smart, hardworking and responsible people can sometimes make mistakes unknowingly as there will always be blind spots that we miss out when we adopt a D.I.Y approach.

What then is the solution?  The answer is simple: delegate financial planning to financial planners. Successful people know how to delegate important work to ethical and competent people, the average Singaporean on the other hand, adopts a KKKKK mentality (Ka Ki Kor Ka Ki , also known as "I am solely responsible for my own well being"), It is unlikely one can be more resourceful than people who do it for a living (E.g  mortgage specialists, property agents, insurance agents etc). The real key is finding someone who is trustworthy and truly has your interests at heart in a sales focused industry.


In a capitalist society like Singapore, the best security is financial security. Financial security does not come from having a high active income but rather having a solid financial plan, which cover often overlooked aspects such as retirement planning and estate planning. This is an area where many middle class Singaporeans fail badly. Having a solid financial plan builds positive emotional health and creates a future that we can all look forward to. 

Watching one's young children grow up is one of the greatest joy a parent can experience in his/her life, we must not let unnoticed gaps in a family's financial planning ruin that reality for us.

For married couples with simple finances, do feel free to contact me at 8183 2979, I will be glad to assist with a simple review.

Do read my other articles :
Common mistakes Singaporeans make when approaching financial planning
The downside of free financial advice