Double debt trouble for the 'sandwich generation'

Over-60s find themselves dealing with both dependent children and elderly parents, which is pushing many into money troubles.

The number of over-60s struggling to deal with debt and still have dependent children has increased markedly in the last few years. We provided debt help to 54% more people within this group in 2012 compared to 2009. This increase suggests that the combination of the current economic climate and people starting families later in life is leading to an increase in debt trouble for the ‘sandwich generation’.

As well as looking after dependent children, many over-60s may also be supporting elderly parents, leading to the potential for double trouble. Commonly referred to as the sandwich generation, these people are finding themselves sandwiched between the demands of their children and parents.

Children dependent for longer

Every time new unemployment figures come out we see that younger adults are disproportionately affected by the sluggish economy. However, the numbers never mention the parents of these children that are often left supporting their children into their twenties and even their thirties.
Having dependent children does take its toll on finances. Our figures show that the average debt of a person aged over 60 with dependent children is nearly £6,000 more than their counterparts without dependent children.

Challenges faced by older parents

Having dependent children when you’re getting close to (or have passed) retirement age presents new challenges which can lead to debt problems, particularly if there are elderly parents to care for too.

While many people find their earning power increases with age, many in their sixties find that either family commitments or failing health can lead to reduced income, making it even more difficult to cope. When you add to this the obligations to help out with an adult child’s finances then it’s easy to imagine where the trouble can start.

Blame the parents?

It’s possible that many may quickly blame the parents. “They should have thought of this when they decided to have children,” may easily slip from the mouth.

We see it another way. You’d have to have a crystal ball to have foreseen how the cost of higher education would increase, or how unemployment is hitting young adults much harder.

20 plus years ago it would have been reasonable to assume that their offspring would be able to get a decent university education supported by a grant and a part-time job in a local bar.

NUS estimates on the average cost of studying for a degree come in at £22,000 a year, working out at £66,000 for a three-year degree course. While it’s fair to say that a good chunk of this will be covered by student loans, there’ll be much that is expected to be picked up by parents too.

And with the kids that didn’t go to university, it was impossible to know that a worldwide recession would hit, impacting on younger working age people doubly hard.

Debt and the over-60s

Being in debt when you’re over sixty can add an extra level of stress. If you’re in your twenties and have run into some financial trouble then you’ve got plenty of your working life left to sort things out. Unfortunately the same can’t be said for those in their sixties and seventies, and many will have to consider options such as equity release.

While it’s possible to go on working past the standard retirement age, the idea of having to carry on working into your old age isn’t a pleasant thought but it’s a harsh reality for many. The alternative, dealing with debts on a pension income, can be inconceivable.

Tips for a debt-free retirement

In reality you need to plan for a debt-free retirement well ahead of your sixties:

• Get a free State Pension forecast - This will help you to know what you’re likely to receive when you reach pension age.
• Keep an eye on your mortgage - Make sure your mortgage is going to be paid off in time for your retirement. We speak to many people on interest-only mortgages who haven’t got an idea how they’ll pay it off. This is the sort of problem you need to approach years in advance.
• Avoid debt - We’re a debt charity so we’re bound to say this, but it’s true. If you know you’re coming up to retirement then it’s important to avoid any unnecessary debt wherever possible. Getting a new sofa or kitchen on finance can be tempting but only consider new debt if you’re sure you’ll be able to pay it off easily.
• Get help with the debts you have - It’s easy to fall into a cycle of paying minimum payments and thinking that you’re doing fine. The only problem is that you’re probably not bringing the balances down quick enough and if your finances are tight there’s a good chance you’ll be relying on credit to get by in the longer term.

If you’re one of the sandwich generation we can provide free debt help with our online advice tool, StepChange Debt Remedy. It’ll give you a personal action plan in less than 20 minutes.

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What to do if your children are in debt