Are You Part of the Sandwich Generation?

We see many clients in the middle of the sandwich generation. 

On one hand, they are taking care of their children, whether young children or older financially dependent children. On the other hand, they are providing care for their aging parents - which can mean time, emotional support, and/or financial help.   

Dealing with the challenges that accompany taking care of both groups at the same time can be draining. It is a noble undertaking and one that most people desire to meet with grace and diligence. However, being between these two circumstances also brings heavy concerns and questions as to the best financial paths to take. 

The Pew Research Center found that one in seven Americans between the ages of 40 and 60 are providing care in the form of financial assistance simultaneously to both child(ren) and parent(s). 

This is in addition to the strain of working and needing to contribute to one’s own retirement. This combination can add significant stress, both emotional and financial.  

Here are just a few financial tips to help members of the sandwich generation: 

1. Take care of yourself and provide for your own retirement needs. It’s the old addage about “putting on your own oxygen mask first before you put it on another” principle. If you are not saving for retirement, you will be in double trouble because you will not be in a position to help either your children or parents. You may only be able to start small, but contributing to your employer match, starting your own retirement plan as a small business owner, or beginning an IRA/Roth IRA can all offer long-term growth as well as tax benefits. 

2. Take time to teach your younger children the principles of wise spending, diligent saving, and charitable giving. Modeling these three principles for children can have not only a lasting effect on your bank account and own emotional well-being, but on theirs as well. If a child can grasp budgeting for things they need, delayed gratification for the things they want, compound interest, and the joy of giving, they will be far ahead when they leave the nest.  

3. Guide financially dependent older children by letting them shoulder some of the costs of living, advising them to stay out of credit card debt, and set expectations. It is fair to ask them to pay a reasonable rate for room and board and a portion of household expenses. This removes the use of the “mom & dad discount” that will set them up for a more extravagant lifestyle than they will be able to sustain long-term. This can be a great time for them to save up an emergency fund, pay back student loans, and prepare to be independent by having clear parameters of what is expected as an adult. 

4. Look for creative ways to financially support aging parents. Part-time in-home senior care can be expensive but may be a way to give yourself a break and relieve stress. It may also be a way for you to continue at your present job which could help your overall financial situation and give peace of mind when you cannot be available. If you are the primary caregiver, there are tax benefits if you meet certain criteria that include a personal exemption, a dependent care tax credit, and medical expense deductions. You could also consider adapting their home so they can live independently for a longer time, or your home for them to move in with you in order to be close by and cut costs in the long run. And always remember that even though you may be helping them pay bills, etc., if it is their money you are managing, respect that the savings they built over a lifetime is theirs. 

5. Last of all, talk about finances with those you love. Talk about feelings, expectations, and planning needs openly, all with an objective of making the most of the situation and resolving any issues quickly to keep stress at a minimum. Whether it is a conversation with your adult child, your older loved one, or both, honest heart-to-heart talks can bring healing and good ideas. 

As certified financial planners, our goal is to learn what is important to you and work with you to develop a plan that is tailored to your specific needs and situation. We help busy people like you achieve your goals.