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    The Sandwich Generation: Stuck Between Your Parents and Children

    The Sandwich Generation: Stuck Between Your Parents and Children

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    Do you provide financial support to both your parents and your children? Are you concerned about how your obligations to care for multiple generations of your family will impact your financial future? If so, whether or not you know it, you’ve earned a place in the so-called “Sandwich Generation.”

    Of course, situations in which adults support their parents and children simultaneously are not new. Lately, it seems as though more families have joined the ranks of the Sandwich Generation. There are a number of reasons — people are living longer and struggling to make ends meet, elder care is becoming very expensive, and college costs are soaring.

    Sometimes it feels like your only choice is to re-align your financial priorities so you can be a caregiver to your parents and your children — at your own expense. Even worse is the fear your children will be in the same challenging situation when you are older and it’s their turn to care for you.

    Caregivers are Not Alone

    Over the past 15 years, the percentage of adults providing care or financial assistance to a parent has more than tripled, with more than 25 percent of U.S. households caring for a loved one age 50 or older.1 According to data compiled by the Social Security Administration, about one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95.

    With people living longer, this not only means that you need to plan for a longer retirement, but also you need to take into account that your parents are living longer, too — potentially stretching their finances while in need of a greater degree of care. In fact, you may be providing care for an aging parent during your retirement years.

    Caring for Your Children After College

    Adding to an already challenging situation, roughly half of adults have provided some financial support to at least one grown child in the past year.2 With a challenging job market and skyrocketing student loans, Sandwich Generation parents are often left to make a tough decision: Given all of their obligations, how much support can they provide to help recent grads start out on their own?

    Managing the Financial Balancing Act

    As part of the Sandwich Generation, at some point you may encounter three competing goals: your retirement, your children’s education, and your aging parents’ health care or long term care needs as they turn older.

    Most financial professionals will remind you not to sacrifice or jeopardize your retirement funds before taking on any other costs. Just as we’re all reminded when flying to put on our own oxygen mask first in case of an emergency before assisting young people or elders, it’s important that you have a solid plan in place that can provide you with the retirement income you’ll need. (Related: Plan for Retirement)

    College Planning

    Once you’ve established your own financial needs for retirement, you can focus on your children’s college education. You may want to explore the many options for tax-advantaged college savings accounts, which can provide an affordable and convenient way to save for college on a consistent basis.

    Financing Health Care

    Have your parents addressed their health care needs? If not, this is a discussion that’s wise to have. Whether they — or you — cover their monthly costs, this is an area of consideration you do not want to leave unaddressed as they grow older. A couple retiring in 2014 is expected to need $220,000 (in today’s dollars) to cover health care costs in retirement.3

    Starting the Conversation

    As the primary provider or caretaker of your parents and kids, the most important thing you can do is have open communication with your loved ones. The following are a several topics and questions that are important to discuss:

    • If possible, before your parents retire, take the time to understand your parents’ vision for the future, their financial resources, and any plans they’ve already put in place for care.

    • Speak to your significant other about your life insurance and disability income insurance. Have you considered that you may have two sets of people who depend on you?

    • If you have a high school student, talk to them about college finances. Encourage them to speak with their guidance counselor about scholarships, grants or other methods of paying for school. (College Cost Calculator)

    A financial professional can give you tips on how to initiate these discussions, and can even help facilitate them. There are many obligations — sometimes conflicting— that come with being a member of the Sandwich Generation. But by making plans ahead of time and having open conversations with your family, both the older and the younger, you can be in a better position to balance them.

    Life Stages and Life Insurance

    Calculator: How Long Will My Retirement Savings Last

    1 The MetLife Study of Caregiving Costs to Working Caregivers: Double Jeopardy for Baby Boomers Caring for Their Parents was produced by the MetLife Mature Market Institute in partnership with the National Alliance for Caregiving and the Center for Long Term Care Research and Policy at New York Medical College. June 2011

    2 Pew Research Center’s Social & Demographic Trends Project: The Sandwich Generation: Rising Financial Burdens for Middle-Aged Americans, January 30, 2013

    3 Fidelity Benefits Consulting, 2014.

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