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Sandwich Generation: Managing Mom, Dad, Kids—and Finances

Financial tips to consider when you're in the middle of caring for aging parents and your children.


What is the sandwich generation? It defines the group of people—typically in their 40s and 50s—who simultaneously care for aging parents' needs while raising their children under age 18.

Does this group have different financial needs? Financial consultants Melissa Ohler and Addison Schubert discuss what to consider when you're a part of the sandwich generation and feel pulled in different financial directions.

Budgeting for the Sandwich Generation Is Key to Control

Whether you live in a multigenerational home with aging parents and your children—or Mom and Dad live somewhere else, but you're still managing care—a budget is paramount for those in the sandwich generation.

"Understandably, finances can feel strained when caring for more people," says Melissa. Some 45% of those in the sandwich generation report that "care" for aging parents often translates into financial support. It also includes running errands on their behalf and preparing meals.*

"Budgeting is important for everyone; however, a spending plan is critical when you are financially responsible for the generation above you and the one below," says Addison. He suggests figuring out how much you can or are willing to pay to help give care for your parents. "For some, it could mean your discretionary spending takes a back seat."

Budget for You, Budget for Caregiving

Another option to consider when budgeting is to separate the money you need for your own family versus the cash you need to care for your parents. "Keeping these items separate may help you budget more accurately for what you will need to spend as a caregiver versus the day-to-day essentials your family needs," says Melissa.

Having a budget may also help you avoid taking on debt to help care for your loved ones. Over half of the people in the sandwich generation report they have made a financial sacrifice, about 50% say they struggle to pay for essentials and 45% of them carry credit card debt.*

For some, caring for a loved one could also mean spending time away from work and reducing your income. In addition, those in the sandwich generation may be feeling the pinch of staying ahead of inflation more than those who don't have the same obligations. Housing, childcare and elder care costs are rising, plus student loan repayments are restarting.

Both higher prices and the potential for reduced income should be part of your budgeting considerations.

The Sandwich Generation Can't Afford NOT to Plan for Emergencies

Just like a budget is a must when caring for more people than you may plan for, the same is true for having an emergency fund. Losing a job or dealing with a serious illness is hard enough when you don't have others relying on your income. Caring for your parents can add additional financial stress.

"While the standard is to save three to six months of expenses in your emergency fund, if you're part of the sandwich generation, you may want to consider having even more liquid assets," says Addison.

Of course, the actual amount you may need depends on your income and your monthly expenses, but you also must consider how many people are relying on you.

Paying Off Debt in the Sandwich Generation

As if you don't have enough to worry about in caring for your parents and your children, debt can be another financial strain. Our consultants say paying off debt goes back to the critical importance of having and sticking to a budget.

"Just like any other expense you have, make sure paying down high-interest debt like credit cards is a line item on your budget," says Melissa. "And the budget may help you avoid taking on additional debt."

Addison says you could start with paying down the debt with the highest interest rate. "It's tough when you have so many financial obligations, but you'll be glad you attacked the debt now so you can feel more financially independent later, especially as you approach your own retirement."

Planning for Your Future May Help Ease the Sandwich Burden

Being part of the sandwich generation can feel like you are in a financial tug of war. From wanting to save for your children's future education, to caring for the needs of your parents and preparing for your retirement, there's a lot on your plate. Unfortunately, some caregivers put their own future needs last. But our consultants say don't leave yourself out.

"If you have a retirement plan at work and your employer matches contributions, consider that at the very least," says Addison. If your contributions are pretax into the employer's plan, you may not miss much on your paycheck—or less than you would think.

Is it OK to stop saving for the future if caregiving is taking too much of your budget now? Possibly, say our consultants, but it may depend on how much you've already saved or if you have a lot of debt. Many people wonder if they should save for retirement or pay off debt. Add caregiving into the mix, and the stakes will be even higher.

"A bright spot about being in the sandwich generation is that it hits home the importance of planning for your future," says Addison. Many who are caregiving now don't want their children to have the same financial or other concerns about being stuck in the middle, so they are taking steps to prepare. Some 42% of current sandwichers are setting aside money for their children to care for them later.*

Sandwiched Between Adults: What if Your Kids Are Over 18?

While the traditional definition of the sandwich generation means you are caring for your parents and children under 18, many people provide financial support for adult children.

"Parents tend to help their adult children financially for different reasons, one being that it's tougher now for young adults to make it on their own," says Melissa. Still, if a person is caring for an aging parent and supporting an adult child, it can negatively impact the person's financial situation.

Addison says, "It's understandable that parents want to help their adult kids to have a firm financial footing when they're just starting out, especially with inflation pressures and if they have student loan debt." Living with a parent can help a young adult save money, invest and pay off any loans. Parents may even decide to help with a downpayment on a house for an additional financial boost. "Where it can be troublesome is if the parent harms their own finances," he says.

Our consultants suggest setting ground rules and talking through expectations with adult children. That can include how long the arrangement will last and how much financial support will be given.

"Going into an arrangement where both parents and adult children understand the boundaries can help prevent misunderstanding and harming the parent-child relationship—which should be the most important thing," says Melissa.

Not Sandwiched Yet, but Could Be? Plan Now

While the typical person in the sandwich generation is between 40 and 50, more millennials (ages 28 to 43) are joining the group due to the need to take care of parents. And while some aren't yet raising their own children, caregiving could make it harder to be financially ready for things like purchasing a home or starting a family.

The good news is if you aren't yet fully sandwiched, you have some time to prepare. That may start with having a conversation with your parents and siblings about how you will collectively manage if the caregiving need arises. The conversation is important whether your parents are financially prepared or not.

of the current sandwich generation have not discussed financial needs, health care or estate plans with their parents.**

"While this isn't the easiest conversation to have, talking to your parents about their future plans while they are still healthy can help you all prepare," says Melissa. "You’ll be in a lot better position if you plan now together.” Already sandwiched? It’s never too late for the talk.

“Thinking about your future now is critical, too, because one of the most important times to save is when you’re just starting your career,” says Addison. That’s because starting early to invest for your future can have a big impact on how much you have in retirement.

“A lot of times, your potential success in investing may be about time in the market—even more important sometimes than how much you save,” he says.

Financial Planning for the Sandwich Generation

There’s a lot to think about financially when you are part of the sandwich generation, and a financial plan may help you sort it all out. “Talking over all your needs with a financial professional may help relieve some of the financial stress people feel,” says Melissa.

Addison agrees. “People seem to feel better when they have a plan, and if you’re going through sandwich generation stress—mentally, physically and financially—you may want to consider it.”

Our financial consultants can help you with financial planning, either in a session or two, or ongoing with our in-depth financial planning and advice service. However you choose to plan, our consultants say to consider it for your well-being.

Melissa Ohler, CFP®

Melissa Ohler, CFP®

Financial Consultant

Addison Schubert

Addison Schubert

Financial Consultant

Feeling the Squeeze of the Sandwich?

Let’s talk through your finances and your plan.

New York Life Wealth Watch Survey, New York Life, September 2023.

Policygenius Sandwich Generation Survey, January 2023.

The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

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