Financial Strategies for the Sandwich Generation

Daycare expenses, extracurricular activities, college planning, and hectic schedules are already overwhelming for many busy parents. When you add in care for an aging parent, there is often little time left over for anything else. Welcome to the “sandwich generation,” where a growing number of adults find themselves sandwiched in between two generations, serving as the glue that holds the entire family together.

Today, close to half of the adults in their 40s and 50s have at least one parent 65 or older as well as one or more children under the age of 18, according to the Pew Research Center. Of this group, a full 15 percent are financially supporting both parents and kids, creating a wealth of financial and emotional strains and challenges.

The good news: You are not alone. This population is expanding as seniors live longer, while kids are taking longer to leave the nest, resulting in greater awareness of and support for the sandwich generation than ever before. The bad news: While often rich and rewarding in matters of the heart, this time of life can be both expensive and exhausting.

Stuck in the Middle

Beyond basic financial support for the generations above and below, many Americans in their 40s and 50s struggle with additional challenges and priorities.

• Caring for an aging parent can impact careers. According to the AARP, one in five retirees now leaves the workforce earlier than previously planned to care for someone, while nearly 70 percent report issues such as arriving late/leaving early, taking extra time off, curtailing total work hours and switching jobs. The report notes that U.S. businesses lose up to an estimated $33.6 billion per year in productivity.

• Emotional care can be equally as in demand as financial support. If you have a grieving parent or someone who isn’t well-versed in health care issues or financial planning, they may be confused, upset, and/or unwilling to share important information. Likewise, if you are spending a lot of time taking care of your parents, your kids may feel neglected. Caregivers can also struggle with sleep issues, depression, anxiety, difficulty concentrating, and more.

• Time is rarely on your side. With 24 hours in a day, you can truly only do so much. Between family, work, friends, and other commitments, you will likely feel yourself pulled in many different directions and regularly wanting or needing to be in two places at the same time. 

If you are entering or in the throes of this phase, planning can ease the burden. More than half of “working-age households” are at risk of coming up short when it comes to retirement needs, according to the National Retirement Risk Index from the Center for Retirement Research at Boston College.  

First, it is important to ensure that your emergency reserves are funded and continue to make your retirement planning a top priority. At the very least, try to contribute up to your company’s match, if available. 

And while it can be hard to plan for the future when you’re facing very real challenges at present, saving for college is also something to consider, as tuition prices are steep. A 529 college savings plan is a tax-deferred option that can help pay for qualified higher education expenses when the time comes.

How to Find Balance in the Sandwich Generation

Every family and every situation is unique, so it is important to be thoughtful when you examine your particular sandwich generation financial strategies and concerns. The following tips can help you find greater balance and acceptance:

• Talk about money. While this is an uncomfortable topic for many families, discussing your parents’ plans and setting your kids on a good path are critical conversations to have. If you wait until a crisis, your options often narrow. Make sure you understand your parents’ medical wishes, where to locate important documents, their income/expenses, spending patterns, and preferences when it comes to living arrangements. When kids are old enough to understand the concept of money, communicate with them, as keeping them in the dark will not help anything. While many parents today still support their grown children, education is the first step to financial success. Help your kids with budgeting and planning and let them know what you expect in terms of future college costs.

• Put estate planning at the top of your list. If your parents have been poorly prepared when it comes to end-of-life issues, you definitely won’t want to put your kids in that same boat. There is no time like the present when it comes to addressing your estate planning needs. A good plan goes beyond wealth management and incorporates your family’s values and legacies in addition to wills, trusts, advanced health care directors, and powers of attorney.

• Look into tax advantages for caregivers. If you are serving as a caregiver for a relative and pay at least half of their care, you may be able to claim them as a dependent. Also, you may be able to deduct mileage for doctor’s appointments, prescription costs, medical supplies, and more.

• Look into flexible work arrangements. Telecommuting, flextime, and extended leaves are all possibilities than can reduce your work-life stress and create more balance. Let your manager know what you are experiencing and ask for a flexible arrangement.

• Take care of yourself. Stress reduction – through yoga, walking, deep breathing, time with friends, a good book – is essential to your mental and physical health. If you aren’t taking great care of yourself, it is really hard to take care of others. While this can be difficult, even 15 to 30 minutes a day can make a difference in your outlook and overall health.

• Ask for help. All of this juggling can wear you down if you try to manage everything on your own. Wolf Group Capital Advisors can help you balance budgets, timelines, and priorities. We can be your partner in planning. You can also join a support group for sandwich generation caregivers or seek out specific sandwich generation financial strategies with your advisor.

Financial planning for one can be difficult. When you are planning for yourself, your parents and your kids, it can be unwieldy. Next time you meet with your financial advisor, make sure you address your sandwich generation concerns with thoughtful preparation and strategy.