Sandwich Generation: How Do You Decide Whose Needs Come First?

Your parents need your help right now, and so do your adult kids. What about saving for your own retirement? If you’re stressed and stretched, it’s time to prioritize.

The sandwich generation is defined as those who are caught in the middle of both parents and children who rely on them for financial, physical, and emotional support. During the pandemic, record numbers of adult children moved back home while elderly parents needed more care. This left those in the middle to make difficult choices about saving for their own retirement, funding education and/or living expenses for children, and paying the healthcare needs of aging parents.

Who is in this sandwich generation? The burdens and responsibilities of middle-aged Americans are increasing. Nearly half (47%) of adults in their 40s and 50s have a parent aged 65 or older and are either raising a young child or financially supporting a grown child aged 18 or older, according to a nationwide Pew Research study. Adults who are supporting multiple family members report that this assistance has a significant impact on their financial well-being. Among those who are providing financial support to an aging parent and supporting a child of any age, 28% say they live comfortably, 30% say they have enough to meet their basic expenses with little left over for extras, 30% say they are just able to meet their basic expenses, and 11% say they don’t have enough to even meet their basic expenses. And if adults are not caring for their parents now, nearly 7 in 10 of the people surveyed said they expected to do so in the future.1

If you are in the sandwich generation, and are providing financial, emotional, or physical care to an aging parent, it is likely that you have thought about how you will want to be cared for in the future. If your finances are strained by the caregiving needs of your own parents and gifting to your adult children for living expenses now, how are you supposed to be able to help ensure your own future independence at the same time?

Your top priority should be your own retirement

There are options for elder care and for financing education needs for children, but there are not many safety nets for your own retirement. Here are a few tips for making sure that you are on solid financial footing for your own retirement savings:

  • Work with a financial advisor to help develop a game plan to hit your retirement savings goal.
  • Fully fund your retirement plan options.
  • Consider whether purchasing long-term care insurance is right for your situation.

Next, look at options to help your parents

Once you’ve covered your own retirement planning, next review the options for elder care needs:

  • Review all the assets available for your parent’s support.
  • If there are not adequate assets, consult with a financial advisor to help determine whether your parent is eligible for state benefits.
  • Consider flexible caregiving with other family members.

Next, review ways to provide assistance to your children

If you have minor children who you want to help pay for college, consider whether a 529 savings plan is a good option.

  • If you have an adult child who is saving money for a large expense, such as a wedding or a home purchase, consider whether having them move back home is a reasonable option to give them a boost to their savings account by eliminating rent payments.

For the sandwich generation, you need to evaluate your own financial needs before you can assist other family members. Your financial advisor can give you advice for options available to pay elder care and assistance to your children while still achieving your own retirement goals.

  1. https://www.pewresearch.org/wp-content/uploads/sites/3/2013/01/Sandwich_Generation_Report_FINAL_1-29.pdf

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