Schwab MoneyWise ®

Sandwich Generation Survey

Our survey revealed strong financial ties between the sandwich generation and their children.

The road to financial independence for youth now stretches out farther than ever before. According to our 2010 Families and Money Survey, 41% of so-called "sandwich generation" parents (many of whom are Baby Boomers) said they still provided at least some financial support to their adult children. The survey polled adults who had at least one child between the ages of 23 and 28 and had at least one living parent.

Kids may need to adopt new money behaviors

More than a third of parents (38%) said their adult kids were more reliant on them than they themselves were when they were young, and at least one in five of those parents believed that their 20-somethings had more of a sense of entitlement about money than previous generations. Interestingly, the majority of parents said they would be willing to help subsidize their kids indefinitely. For example, more than two-thirds (69%) expressed a strong preference for their kids to choose a profession they loved even if it meant they would have difficulty paying bills, over choosing a profession they didn’t love but that would pay them well (31%). Parents also reported that saving for retirement (56%) and helping their children financially (44%) were near-equivalent priorities.

Interestingly, despite the ongoing financial support they provided their adult children, 49% believed their kids would eventually be even more successful than they were, and another third (33%) believed their kids would be equally successful.

Parents cited college debt (32%) and unemployment (31%) as top reasons their children were relying on them more. However, they also believed that some contributing financial pressures fell within their kids’ control. Parents cited overspending (25%) and consumer debt (19%) as reasons for their kids’ delayed independence.

"Most of the people we polled told us they were fully independent from their parents by the age of 25, yet many of their kids today aren’t achieving independence until they’re 30 or even older," said Carrie Schwab-Pomerantz, president of Charles Schwab Foundation. "While this is largely due to the economic pressures and complexities of our times, it has major implications for those parents who are simultaneously trying to prepare for their own retirement."

Reasons midlife parents said their adult children are still dependent
  • 32% College debt

  • 31% Unemployment

  • 25% Overspending

  • 19% Consumer debt

A connection between taking out the trash and managing cash?

The survey found that parents whose children regularly did more household chores growing up were more likely to view their young adult children as "very financially responsible" (53%) as compared to those whose children did fewer or no household chores (46% and 39%, respectively). Parents of children who didn’t do any regular chores also saw themselves as having been poorer financial role models.

"There’s a connection here we shouldn’t miss," said Schwab-Pomerantz. "More than just sharing our financial knowledge as parents, fostering a spirit of personal accountability can inspire the right financial behaviors in our kids."

Parents of 20-somethings recognized that they could have done more to foster their children’s independence by teaching them about saving and budgeting and not helping them as much financially. And while 57% of parents saw themselves as a "good financial role model to their children," they also admitted that their children’s spending habits didn’t necessarily reflect this perception.

Parents believed the top three areas of money management where their children needed to improve were:

  • How to stick to a budget and live within their means (48%)
  • How to save money (42%)
  • How to invest wisely (33%)

They also worried that their kids would repeat some of their own financial mistakes, most notably not starting to save for retirement early enough (43%), not saving money for emergencies (42%), and carrying credit card debt from month to month (30%).

The sandwich generation's financial relationship with their parents

Baby Boomer parents have often been referred to as a "sandwich generation," reflecting the combined pressures of raising children and caring for aging parents. Yet the Schwab survey found that the most significant layers of the sandwich seemed to be the pressures of retirement planning versus helping adult children.

While a significant percentage of this population (41%) provided at least some financial support to their adult kids, 6% provided financial support to both an adult child and an aging parent. And only 1% worried about supporting their own parents, though the vast majority (85%) said they were at least a little worried about their parents’ financial future. Not surprisingly, the biggest worries for midlife parents were not being able to retire (29%), outliving their retirement money (22%), and not saving enough (22%), followed by the worry that their children wouldn’t become financially independent (11%).

Lessons learned: it's back to money basics

While major financial concerns persisted, two-thirds of people surveyed (66%) believed there was a silver lining to the 2008 economic recession. Top lessons learned included "learning to live within my means" (49%) and being "much more involved now with my finances" (43%).

Positive changes the sandwich generation made as a result of the 2008 recession
  • 49% Learned to live within their means

  • 43% Became much more involved with their finances

  • 43% Paid more attention to financial statements and contracts

  • 39% Talked to kids about money management

Other behavioral changes people made were:

  • Being more cautious about credit card use (62%)
  • Asking more questions when it came to financial decisions (59%)
  • Reviewing financial statements more closely (59%)
  • Reading the fine print in financial documents more closely (54%)
  • Talking to kids more about money management (54%)

In fact, the survey found that these parents were having more frequent discussions with their kids about financial fitness and personal responsibility than conversations about physical fitness, spirituality, alcohol and drug use, marriage, or sex.

"To my mind, this is a significant and encouraging shift," said Schwab-Pomerantz. "Ten years ago we found that parents rarely—if ever—had conversations with their children about money and finance."

Women vs. men

The survey also revealed some significant differences in the relative outlook of women vs. men. For instance, more women than men believed their kids' ultimate financial success would surpass their own (56% vs. 42%). Conversely, more men than women believed their kids would be less successful (23% vs. 14%).

Women were also more likely than men to have made recent, positive changes in their financial behaviors and habits, including talking to their children more about money management (59% vs. 47%). Men were more likely than women to say there hadn’t been any silver lining to the 2008 economic recession (38% vs. 29%).

Ironically, among those worried about their financial future, fewer women than men were worried about outliving their retirement money (19% vs. 26%).

Keep learning

About the Survey
The 2010 Families & Money survey was conducted by Lieberman Research Worldwide on behalf of Charles Schwab & Co., Inc. in February 2010. The nationally representative online survey polled 1,000 people who are parents of at least one child, age 23–28, and who have at least one living parent. The average age of survey respondents was 53. The survey findings have a margin of error of plus or minus 2.6 percentage points at the 90 percent confidence level.


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