The Sandwich Generation and Money: Financial Care For You, Your Kids & Your Parents

As a parent, you have one of the most important jobs in the world - raising and encouraging the next generation. Some parents, however, may find that they’re sandwiched between raising their kids and caring for older loved ones. Aptly named the “sandwich generation,” those in their 40s and 50s may be feeling the pressure of being stuck in the middle. In fact, a recent study suggests almost half (47 percent) of adults are a part of the sandwich generation.¹ 

If you’re a loving parent and adult child caring for parents of your own, how do you strike a balance between your financial wellbeing, your child’s needs and your parents?

What Does the Sandwich Generation Mean?

The term "sandwich generation" refers to folks who are still raising/providing for children, but are also providing care on some level for parents. This situation generally occurs when you're in you're 40s or 50s. The level of care ranges quite a bit. The spectrum includes families that provide help here and there to families that have a parent who lives with them and is financially dependent on you. While it's a great blessing to have 3 generations of family, that doesn't mean that care providers for two generations are without challenges. 

Understanding Your Situation

You and your spouse may feel compelled to provide care for your aging parents in addition to raising children, meaning you don’t mind the added responsibility. But stretching yourself financially between saving for college, preparing for your own retirement and covering your parents’ costs can be a tough situation to find yourself in. And depending on how much care your kids or parents require, your income stream could be affected.

That’s why protecting your own financial standings when caring for loved ones should remain top of mind. Finding that balance is, of course, easier said than done. But here are a few ways to ease the financial toll of caring for elderly parents while being a parent of your own.

"Children, obey your parents in the Lord, for this is right. “Honor your father and mother” (this is the first commandment with a promise), “that it may go well with you and that you may live long in the land.”" Ephesians 6:1-3 ESV

Tip #1: Build Your Support Network

Sometimes families feel like they need to take on all of the responsibility in caring for elderly parents. You may be the oldest sibling in your family, considered the most responsible or simply live the closest to Mom and Dad. But if you find that the caretaking is becoming too much for one person, it may be time to have a transparent and honest conversation with your siblings or other family members. They may not know just how much added responsibility you’ve taken on and they may be just as eager to help.

Family members aside, it can be beneficial to gather a team of financial professionals as well. Your financial advisor, for example, can help keep your financial priorities top of mind, while also developing a game plan for managing your caretaker responsibilities. Other professionals you may want to engage with could include an accountant, estate planning attorney, insurance agent and college planning professional.

Tip #2: Keep Your Savings Goals in Mind

When they do the safety talk on an airplane, the flight attendant will always tell you to put your oxygen mask on first before helping someone else. Why? If you're in distress, it's difficult to help someone else. Remember, you can not help others financially or otherwise if your own financial standings are in jeopardy. Trying to put a kid through college while caring for aging parents can drain your savings quickly if you aren’t careful. That’s why making your own financial goals a priority isn’t easy, but important.

In fact, staying focused on your long-term financial goals (like retirement) can actually be thought of as a way to protect your own kids. Emptying your retirement accounts early, or neglecting to save enough for retirement, could leave you in a bad spot later in life. In turn, your children may find themselves providing for you financially while they’re raising kids of their own. Remembering to prioritize your long-term goals now can help set you, your children and your future grandchildren up for a less stressful financial future.

Tip #3: Create Boundaries For Your Children

If your kids are college-age or older, you may be able to set financial limitations with them. This won’t be easy, but it may be necessary in certain circumstances. If they don’t already work, encourage them to find a part-time job. And if they’re already earning an income, help your kids develop a budget and become as self-sufficient as possible. You may even find that when presented with the opportunity, your kids are able to rise to the challenge and learn good money habits from being less financially dependent on their parents.

If your kids are younger, start working with them to understand the importance of saving versus spending. That way, when they’re old enough to start earning money of their own, they’ll be well-prepared to work toward financial independence from you.

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Tip #4: Consider Investing in a Long-Term Care Policy 

A long-term care insurance policy can cover a number of expenses not typically covered by health insurance. This could include assistance with activities of daily living (ADLs) such as bathing, dressing and eating. Care may be provided wherever your parents are living - at home, in a nursing facility or adult daycare.

A long-term care policy is typically bought when individuals are in their 50s or 60s, as a policy can’t be obtained once a person has been diagnosed with certain debilitating conditions or diseases. Depending on your parents’ health, you may still have time to purchase a policy. If not, you may want to look into obtaining a policy for you and your spouse if you’re concerned about your own future care needs.  

Protecting yourself, your parents and your kids requires careful strategizing, discipline and planning. It’s a balancing act, but it’s one you don’t have to perform alone. Your financial professional can help steer you in the right direction while keeping your financial goals a priority.

Tip #5: Keep Communicating

Caring for 2 generations is a difficult role. However long it lasts, keep communication lines in your family open. When you stop talking, resentment can creep in. No one wants that. If something isn't working, find a way to bring it up. If you need another family member to pitch in more, talk with them and see what can be worked out. "Grin and bear it" is not the right approach. Be kind, but direct, and everyone will be better off. 

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