The Sandwich Generation

As a mother of three, I can relate to this noble notion. The mere thought of my little angels having to struggle through life leaves me cold.

The reality is that caring for your children means looking after your own financial wellbeing. The thought of my children battling through life financially is not as severe as me being financially dependent on them.  Please do not get me wrong, I am not saying that we should forget about our offspring’s investment portfolios, but rather that we should understand the hierarchy of investment priorities.

Many of us are faced with the reality of being wedged between the financial needs of our children, as well as our parents.   This is often referred to as the sandwich generation; a generation of people, typically in their thirties or forties, responsible both for bringing up their own children and for the care of their ageing parents. A noble idea with severely negative consequences for the one stuck in the middle. The cycle will most likely repeat itself for a few generations.

With this in mind, I want to re-emphasise the point – think twice before allocating most of your investable cash to your children’s investment portfolios.

It is a well-known fact that only 6% of South Africans can retire with enough capital that will fund all their future financial needs and keep them on the same standard of living that they have become accustomed to over the years. How do we address this crisis that we have fallen into?  How do you ensure that you do not become part of the 94% of South Africans that cannot truly afford to retire?

Although one can dream about schemes that will make you rich quickly, rather focus on the reality, where saving to fund your financial dreams takes centre stage.

One of the easiest methods to do this is to utilise the benefits of a Retirement Annuity, as well as a Tax-Free investment product to your advantage. These products give you a cost-effective way, of changing your dreams of financial independence, into reality. A bonus is that this will truly give your grown-up children the ability to focus on their own financial freedom, without feeling guilty about you.

Yes, not everyone agrees with the fact that these products are the most effective way to invest, but I struggle to look away from the benefits of these products.

It is difficult to deny the pleasure of paying less tax, purely because you saved in your Retirement Annuity. In addition to this, knowing that my Retirement Annuity and Tax-Free investment will grow free of tax, makes me want to leap for joy. I am first to acknowledge the fact that their products also have less attractive qualities, but I am of the opinion that with the assistance of a well-qualified Financial Advisor, you will be able to tailor-make your Retirement Annuity and Tax-Free investment, to meet your needs.

With the end of February 2022 fast approaching, remember to make use of your annual R36 000 contribution allowance into a Tax-Free Investment plan. In addition to this, if you structure your contributions to a Retirement Annuity, in an effective way, you can alleviate your annual tax burden. To me, this sounds like an early Christmas present to myself, with longer-term positive results for my children who will be free to live their dreams, which most likely do not include looking after me.

If you are privileged enough to receive a year-end bonus, why not rather use some of the money to help your future self? If at all possible, rather invest than spend.  You and your children will thank yourself one day for taking care of yourself.