Woes of the sandwich generation: How much do you need to support your children and parents?

For those stuck between supporting their parents and raising young families of their own, “sandwich generation” truly is an apt description.

If this feels familiar, you may be wondering how much you’ll need to support both your children and your parents. How can you grow your wealth to fund your family expenses without sacrificing your own financial goals?

Expected key expenses for children and elderly

The first step is to calculate your family’s expenses. At a glance, raising children in Singapore generally involves the main expenses below. You can read more in our article, The cost of raising a child in Singapore.

School fees  
Pre-schoolers $800–$1,400 per month (before subsidies)
Primary and Secondary students $25 per month
Junior college $400 per year
Polytechnics $3,000 per year
ITE $635 per year
Tuition fees and enrichment classes $1,600 per year
University fees $22,500 onwards, depending on the university.
A 3-year degree programme costs between $24,000 to $43,000 in 2021. Fees are expected to The cost of raising a child in Singapore.
According to Seedly, a typical 3-year course overseas costs $205,000. With a 1.9 inflation rate, they calculate that it’ll cost you $299,400 in 20 years’ time.
Other variable costs Pocket money, insurance, entertainment etc.

On the other hand, a retired elderly person typically needs living expenses for the following:

  • Daily expenses for food, groceries and getting around
  • Medical bills
  • Caregiving support, such as hiring a foreign domestic worker
  • Recreational activities and hobbies

A 2019 study by researchers from the National University of Singapore’s Lee Kuan Yew School of Public Policy found that a Singaporean citizen aged 65 and above needs S$1,379 a month to meet basic standards of living. Those slightly younger, between 55 and 64, need S$1,721 a month.

But these are based on “basic” standards of living. If you aspire to give your parents more comfort and luxury, such as dining and travel, they’ll need more. This is also true if they need caregiving support, such as hiring a foreign domestic worker.

Establishing your parents’ financial situation

As parents, you are in control of your young children’s finances. But it is less straightforward when it comes to understanding your parents’ financial situation.

You may not know how much they spend and receive every month. For instance, they could be receiving financial support from pension schemes, CPF Life, insurance savings plans, retirement savings and family contributions.

There’s no going around it other than having an open discussion with your parents on how much financial support they need. Do they have insurance policies that sufficiently protect them? If they don’t, it’s wise to start putting aside some reserve funds for unclaimable medical treatments.

What does your investment horizon look like?

Since supporting both parties can be costly, the question is, how much time do you really have to invest and grow your wealth to meet these financial responsibilities?

For your children, you have until their undergraduate years when university fees kick in. To be conservative, subtract their current ages from 17 years old to determine your investment horizon for their higher education. If your child starts university slightly later, then that’s a bonus for you.

For elderly parents, consider the average life expectancy, which is 84 for men and 88 for women1. The difference between your parents’ current ages and these figures is how much time you should minimally plan for.

Building your financial plan

With careful planning2, you can grow your wealth to set aside money for your children and parents while still pursuing your own financial goals.

  • Design a plan and determine priorities with your financial consultant
  • Manage each financial goal better with individual portfolios (Read our tips on how you can save up for multiple financial objectives)
  • When it’s time to draw on the funds, shift asset allocation towards lower-risk assets
  • A longer time horizon might mean you are able to take more equity risk

Do you have a plan on managing your wealth to meet the demands of being in the sandwich generation? Get in touch with your Prudential financial consultant today to discuss how you can meet your multiple financial goals.

The information in the article does not necessarily reflect the views of Prudential Assurance Company Singapore (Pte) Ltd (“PACS”). PACS does not represent that such information is accurate or complete and should not be relied upon as such.
This article is for your information only and does not consider your specific investment objectives, financial situation or needs. We recommend that you seek advice from a Prudential Financial Consultant before making a commitment to purchase a policy.

The information is accurate as at 16 March 2022 unless otherwise indicated.