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Christine St Anne is Morningstar's online editor.

There is no doubt these are trying times for people entering retirement. Baby boomers, the generation on the cusp of retirement, continue to face market volatility.

But it now looks like this generation is being confronted with yet another challenge.

Many retiring baby boomers are now caught in a generation squeeze and may end up as the new "sandwich generation," according to Equity Trustees head of wealth management Phil Galagher.

Coined in the 1980s, the sandwich generation referred to couples in their 40s and 50s who were responsible for both their ageing parents and young adult offspring who were still living at home.

"With the elderly living longer and children staying at home and remaining dependent on parental support for longer, the sandwich generation can now include pre-retirees and early retirees as well as the middle-aged," Galagher says.

"Social changes in the last couple of decades mean that retiring baby boomers may end up being the new sandwich generation still financially responsible for children and/or parents."

A lot more young people completing tertiary education are forced to live with their parents longer. Many young people are also living at home in order to save for their own home.

"Another recent social phenomenon is retirees with dependent children, either from second marriages or because they were late starting families," Galagher says.

"All these trends mean that retirees are increasingly likely to have dependent children living at home and requiring significant support."

If these children are not paying rent or not contributing to the household budget, then this places greater pressure on retirees who may be forced to remain in the family home rather than downsize and move into a smaller home that is easier to manage.

"These issues are a relatively new phenomenon, but increasingly need to be taken into account in retirement planning," Galagher says.

Galagher says parents should start involving their children in their retirement planning sooner rather than later.

"With children still at home, early planning and communication can help so that offspring appreciate how their parents' needs and aspirations will affect them," he says.

"While planning is always the key, early communication and discussion plays a major role so that all family members can understand each others' point of view and desires."

The financial planning choices needed to overcome the challenges of the sandwich generation comes down to parenting decisions, according to HLB Mann Judd partner Jonathan Philpot.