Sandwich Generation Feeling Squeezed

 

Just under half of U.S. investors have children and at least one living parent, placing them in what is commonly called a sandwich generation, according to the Wells Fargo/Gallup Investor and Retirement Optimism Index.

Thirty-two percent of surveyed investors reported providing financial help to a child age 18 or older, a parent, or both. Thirty-five percent of nonretired investors and a quarter of retired investors said they give such financial support to these close family members.

The survey was conducted by telephone with just over 1,000 investors earlier this year. It found that more than half of responding investors who aid an adult family member financially believe it is hindering their ability to save for their own retirement.

Specifically, among all investors, just under 60 percent reported they have one or more children aged 18 and older, and of those, 46 percent provide financial support to at least one of them.

About two-thirds of surveyed investors said they have at least one living parent, and of these, 14 percent said they provide either or both parents with some degree of financial help.

At the same time, the poll offered the good news that many investors are engaging in important conversations with family members about money.

Specifically, 70 percent of investors who have a child under age 18 said they have spoken to them about the importance of saving. Sixtyfive percent of investors who have at least one living parent said they have discussed their parents' financial security with them.

"These conversations can be essential to ensuring that adults are positioned for a lifetime of financial independence, and thus not a burden on either their parents or children," says Jon Graff, director of participant services at Wells Fargo Institutional Retirement & Trust. "Children need to develop strong financial awareness before they turn 18 so they establish good savings habits, while avoiding debt in adulthood. Many seniors can benefit from family conversations that help them better understand and manage finances and other resources available to them."

Bills and credit scores

The poll found that the majority of surveyed investors already follow a number of basic steps that contribute to overall financial health. That ranges from more than nine in 10 paying all of their bills on time to barely half tracking their spending by category.

Just over 90 percent said they pay all of their bills on time every month, and just over three-quarters of those surveyed said they are making progress paying down high-interest debt.

Just under seven in 10 said they review their insurance needs once a year. About 60 percent said they check their credit score once a year, and just under 60 percent said they contribute to an emergency fund to cover three to six months of expenses.

Two of the steps tested apply only to investors currently in the workforce. Of those, 71 percent of nonretirees said they make contributions to savings through automatic payroll deductions, and two-thirds said they save at least 10 percent of their income for retirement.

Most surveyed investors who aren't already taking each step said it would be easy for them to start. However, two practices prove more challenging for investors: contributing to an emergency fund and saving at least 10 percent for retirement.

While 57 percent of investors surveyed said they contribute to an emergency fund and another 23 percent aren't contributing but say it would be easy for them to start, a fifth don't have such a fund and said starting wouldn't be easy.

Similarly, while two-thirds of nonretired investors said they already save at least 10 percent of their income for retirement and another 14 percent said they don't but that it would be easy, a fifth don't save that much and said doing so wouldn't be easy.

"Focusing on any one of these individual steps is important, but considering all of them holistically as part of your plan will drive a better outcome," Graff says. "The survey showed that investors practice financially healthy habits in a number of areas, but at the same time, half aren't taking the basic step of understanding their spending by category. That's an important first step in identifying opportunities to save more and achieve their financial goals."

401(10 plans valued

The importance of 401(k)-type plans as a vehicle for helping to achieve retirement security is clear in the finding that 69 percent of investors, including 76 percent of nonretirees and half of retirees, have a 401(k) or 403(b) plan.

The majority of surveyed investors-just under 60 percentsaid they get professional advice when making investment decisions for their 401(k)-type plan. While there is no significant difference by asset level, women are more likely than men to say they use professional advice: 66 percent compared with 51 percent.

At the same time, four in 10 investors said they make their own decisions about what to include in their 401(k)type plan. Most of those investors said they like it that way, but a quarter of those who make their own decisions would prefer to have professional advice.

"From the first day on the job all the way through the retirement years, there are a number of key decisions and levers that can impact your retirement outcome," Graff says. "Although some investors prefer to do it alone, almost seven in 10-those who already get professional advice plus those who don't but would like to-would rather get some help for these key decisions. There are many ways to get that advice, depending on where you are in your journey."

The Wells Fargo/ Gallup Investor and Retirement Optimism Index included 1,007 investors randomly selected from across the country with a margin of sampling error of plus-or-minus four percentage points.

For this study, an American investor is defined as an adult in a household with total savings and investments of $10,000 or more.

About two in five American households have at least $10,000 in savings and investments. The sample size is comprised of 71 percent nonretirees and 29 percent retirees. Of total respondents, 44 percent reported annual income of less than $90,000; 56 percent reported $90,000 or more.

The Wells Fargo/Gallup Investor and Retirement Index is an enhanced version of Gallup's Index of Investor Optimism that provides its historical data. The median ages are 46 and 69 for nonretired and retired investors, respectively.

Wells Fargo is a financial services company with $2 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 8,500 locations, 13,000 ATMs, the internet (wellsfargo.com), and mobile banking. It has offices in 42 countries and territories.