Definition
Sandwich Generation
The sandwich generation refers to people who simultaneously support their ageing parents and their own children, squeezing their finances from both sides.
Common in India given strong family ties and limited social security for the elderly, this dual burden strains cash flow and saving capacity just as the individual should be building their own retirement corpus. Medical costs for parents and education costs for children can compete directly with the person's long-term goals.
Managing it requires deliberate planning: adequate health insurance for parents to avoid large out-of-pocket shocks, term insurance to protect dependants, an emergency fund, and a clear priority that one's own retirement saving is not sacrificed entirely — since children and parents cannot fund a retirement the individual neglected.
Related terms
- Emergency FundAn emergency fund is a readily accessible reserve of cash set aside to cover several months of essential expenses, protecting against income loss or unexpected costs.
- Contingency PlanningContingency planning is preparing financially for unexpected shocks — job loss, medical emergencies, disability or death — so they do not derail your long-term goals.
- Retirement CorpusA retirement corpus is the total lump sum you need to have accumulated by retirement to fund your living expenses for the rest of your life.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.