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Yahoo
5 days ago
- Business
- Yahoo
Britain's sandwich generation sees retirement slide further away
Britain's sandwich generation is feeling the squeeze. Faced with the challenge of caring for children and elderly parents, this cohort of Gen X adults born between 1965 and 1980 is now also braced for another financial curveball. This has been thrown up by Labour's review into the state pension age, raising fears that swathes of the so-called sandwich generation will have to stay in work for longer. As well as sparking a debate over delayed retirements, the review has also highlighted an uncomfortable reality for many parents who have spent years spending on others instead of saving into their pension. Emma McCaffrey is a single mother of two who runs a personal training business. She also looks after her father, who has dementia. Before starting her own company, the 47-year-old worked in a white-collar role in London but never gave any thought to how much she was paying towards her pension. 'I was at an age where I wasn't thinking about those things from my 20s to my mid-30s because, at that point, I was saving for a house,' she says. 'That was my priority.' It was only after becoming self-employed two years ago that the reality dawned on her. 'I had this massive wobble. I was building up a new business and all of a sudden, when I had to remortgage on my own, I had this sort of realisation where I thought, 'Oh my God, I can't keep putting it off.'' Now, she sets aside £250 each month in preparation for her retirement. But this is no easy feat. She says that her generation of women is 'under so much pressure' owing to demands from childcare, looking after parents and coping financially. What the sandwich generation perhaps didn't account for is the possibility of their state pension age being pushed back to later than expected. Liz Kendall, the Work and Pensions Secretary, announced the review into the state pension age last month, opening the door for the statutory retirement age to be increased. The age is currently set at 66 but is poised to rise to 67 by 2028. At the same time, Kendall also announced a commission to examine whether workers are saving enough post retirement, fuelled by fears of a 'tsunami' of pensioner poverty. Such concerns have grown increasingly acute in recent years, as government figures show that almost half of working-age adults are not putting any money into a private pension. The situation isn't unique to the UK, as people in their 40s and 50s across most developed economies struggle to save alongside paying for daily expenses – such as childcare. Yet Britain's sandwich generation seems to be among the worst off. In the UK, the additional costs associated with childcare are a significant burden on a family's income. Overall, Britain has the fifth-highest childcare costs as a percentage of a couple's wages in the OECD, with only the US, New Zealand, Cyprus and the Czech Republic higher. High interest rates have also pushed mortgage costs up, increasing the mountain of expenses facing many Gen X adults. Charlotte Kennedy, a chartered financial planner at Rathbones, warns that the sandwich generation is facing 'a tricky balancing act' when it comes to handling childcare fees, mortgage payments and their pension. 'It's going to be really hard just to make sure that people are taking action in terms of making sure they're saving enough for their retirement,' says Ms Kennedy. Research by Rathbones also found that if the state pension age increase to 68 is brought forward by just one year, those aged 51 to 53 will be the first affected. According to the wealth manager, 51-year-olds would lose out on £17,774 worth of state pension payments if it were pushed back by a year. That is assuming that today's state pension of £12,000 increases by the so-called pension triple lock each year. The triple lock currently guarantees annual increases to the state pension by either average earnings growth, inflation or 2.5pc. However, the policy has recently come under mounting scrutiny owing to the impact on public finances. The UK is estimated to have spent 4.9pc of its GDP on the state pension in 2024-25. And on the current trajectory, that is forecast to reach 6.3pc of GDP by 2054-55. For Giovanna Smith, a 54-year-old social worker who also runs her own matchmaking business, saving for her retirement has never been a priority. Instead, she has been focused on balancing the costs of raising four children while paying for her elderly parents' medical care. When they passed away, she then had to find money to cover the funeral costs. 'I hadn't paid into a pension because I could never afford that extra bit of money,' she says. She is now scrambling to make amends while juggling her work and helping to care for her two grandchildren. 'I have to kind of make up for the time that I lost, so I'm trying to do everything now in my mid-50s,' she says. Unfortunately, her situation is not unique – with an estimated 15 million Britons found to be under-saving for retirement. Mike Ambery, the retirement savings director at Standard Life, adds that the picture is mixed across the world, but Australians have one of the strongest pension systems for workers. In Australia, pension contributions are at least 12pc of an employee's salary 'for virtually everyone'. That is in stark contrast to the grim picture for pensions in the United States, where around 50pc of people retiring have nothing saved into a pension at all. Meanwhile, in Britain, Ambery says Gen X adults should do all they can to 'retire in comfort'. Yet for many in the sandwich generation, the financial burden of working while caring for children and elderly parents makes this far from easy. 'Even if I wanted to stop work, I can't because I don't have a pension,' says Smith. 'It's like a never-ending wheel.' Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Telegraph
6 days ago
- Business
- Telegraph
Britain's sandwich generation sees retirement slide further away
Britain's sandwich generation is feeling the squeeze. Faced with the challenge of caring for children and elderly parents, this cohort of Gen X adults born between 1965 and 1980 is now also braced for another financial curveball. This has been thrown up by Labour's review into the state pension age, raising fears that swathes of the so-called sandwich generation will have to stay in work for longer. However, as well as sparking a debate over delayed retirements, the review has also highlighted an uncomfortable reality for many parents who have spent years spending on others instead of saving into their pension. Among them is Emma McCaffrey. Emma is single mother of two who runs a personal training business. She also looks after her father, who has dementia. Before starting her own company, McCaffrey, 47, worked in a white-collar role in London but never gave any thought to how much she was paying towards her pension. 'I was at an age where I wasn't thinking about those things from my 20s to my mid-30s because, at that point, I was saving for a house,' she says. 'That was my priority.' It was only after becoming self-employed two years ago that the reality dawned on her. 'I had this massive wobble. I was building up a new business and all of a sudden, when I had to remortgage on my own, I had this sort of realisation where I thought, 'Oh my God, I can't keep putting it off.'' Now, she sets aside £250 each month in preparation for her retirement. But this is no easy feat. She says that her generation of women is 'under so much pressure' owing to demands from childcare, looking after parents and coping financially.
