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Sandwich generation feels financial squeeze in caring for parents, kids


According to a 2022 study from the University of Michigan, there are at least 2.5 million Americans taking on these duties. Here are some challenges and solutions for sandwich-generation caregivers to consider.

After Michelle Creeden’s father was diagnosed with a quickly progressing form of dementia, he moved in with her and her son.

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“I have a seemingly endless amount of student loans, but my son and I made it safely through the pandemic, able to order food regularly and pay bills,” said Creeden, principal attorney at the National Legal Center in Candia, New Hampshire.

Creeden, whose father is now 65, says she navigated the situation fairly well, although she hasn’t been able to save any money.

She is part of what’s called the “sandwich generation” of Americans who are simultaneously caring for elderly parents and minor children, as well as keeping up with their own career demands.

According to a 2022 study from the University of Michigan, there are at least 2.5 million Americans taking on these duties. Here are some challenges and solutions for sandwich-generation caregivers to consider:

— Caregivers face financial and emotional challenges.

— Expenses add up quickly.

— Retirement savings can’t wait.

— Every family’s situation is different.

— Caregivers have options.

— Advice from someone going through it.

Caregivers Have Financial and Emotional Challenges

Overall, says the study, sandwich-generation caregivers were twice as likely to face financial and emotional challenges as those who only served as a caregiver for an elderly parent, without also having children to care for.

Financial advisors are seeing their clients face sandwich-generation hurdles, which include increases to their budgets to account for parents’ housing, food, transportation and medical costs.

“Usually these are families that were already a step above living check to check who make the hard choice of owning one car or downsizing their home to be able to provide for aging parents,” says Stephanie Blakes, a certified financial planner and founder of Seren Wealth Advisors in Houston, Texas.

“Arrange your finances so that saving becomes a required expense. Stop putting yourself last, or you will not last.” – Michelle Creeden, principal attorney, National Legal Center

Blakes adds that she’s seen multiple clients remodel their homes to accommodate parents, or two-income families reduced to a single income so one spouse, usually the wife, can become a full-time caregiver.

“In nearly every case, the family sacrifices emergency savings, if they have it, retirement, college savings and vacations, all to meet the needs of others,” she says, adding that she’s also seen aging parents mortgage their home to help a child suffering from a job loss or major health care cost.

“Because most American families have few safety nets, any crisis, be it an aging parent, job loss or health care issue, can result in great financial burdens that are not easily remedied,” Blakes says.

Expenses Add Up Quickly

The costs of caring for elderly parents or in-laws can be significant.

According to a survey conducted by advocacy group AARP, family caregivers generally spend more than $7,000 per year in out-of-pocket costs. That’s an average of 26% of their income going toward caregiving. That doesn’t include lost income through taking time off work, or leaving a job, as Blakes has seen happen.

“The desire to support and protect everyone they care about usually leaves many adults with a major retirement savings deficit,” she says.

She adds that one of the biggest missed opportunities is not getting the full match on qualified retirement plan contributions.

The simple adjustment of saving enough to get a full match is one of the highest returns Americans can get, she says, yet many feel their paychecks are not enough to cover basic monthly costs. As a result, they’re not saving even 3% of their paycheck to get the 401(k) match.

“Add to it the cost of care for others, especially aging parents, childcare or college, and the strain of inflation on everyday costs, and they usually make the hard choice to not save at all for retirement,” Blakes says.

READ: Using Life Insurance as an Asset Class for Investing

Retirement Savings Can’t Wait

Frequently, these sandwich-generation caregivers assume they can wait to save for retirement, believing that once their kids are out of the house or other responsibilities subside, then they can save.

“What they do not realize is that the longer one waits, the less time one has to benefit from market growth and the less able they are to withstand market volatility,” Blakes says. “This reality, when finally understood, becomes overwhelming or just not achievable, so they give up.”

In addition to funding their own retirement, sandwich-generation Americans may face challenges in paying off their own debt and saving for their kids’ college tuition.

Every Family’s Situation Is Different

“The answers on how to do it differ for every family, but some prioritization may need to happen,” says Tim Melia, principal and financial planner at Embolden Financial Planning in Seattle, who also works with clients to make a financial plan that supports aging parents and school-age kids, including planning for college costs.

He points out that elderly parents need financial support immediately. Adult children may need to make their parents’ support a priority if they still have plenty of time to save for or delay their own retirement.

However, he notes, sandwich-generation adults need to avoid a situation where their children have to support them someday if they don’t continue saving for their own futures.

For example, the sandwich generation’s children may need to take out student loans to fund college. That generation has time to pay back the loan, but the sandwich generation can’t use loans to fund retirement.

“If there is financial capacity later in life, perhaps the parents can circle back and help the kids with loan payments or other financial needs,” Melia says.

Caregivers Have Options

People facing the challenges of caring for parents while also raising a family aren’t without options, though.

Stephen Dunbar, a financial advisor at Equitable Advisors in Atlanta, says it’s imperative that caregivers understand their budgets and look for recurring expenses, such as subscriptions, timeshares or expensive gym memberships, that they could temporarily eliminate.

Dunbar also recommends that caregivers do an audit of their parents’ finances and expenses to determine what adjustments can be made.

“If your parents own their home, consider whether it makes sense to have them sell it and move in with you, rather than taking on the expense of maintaining a second home,” he says.

Many people also don’t take full advantage of the benefits their employer offers. Those resources may include adult day care, mental health apps, counseling for free or at reduced rates, or access to retirement assets through loan or in-service withdrawal to assist with expenses in the short term.

Advice From Someone Going Through It

As she experiences caring for an elderly parent while raising a child, Creeden has some suggestions for others going through the same thing.

As an attorney helping people navigate their financial lives, she cites the familiar advice from flight attendants: Put your own oxygen mask on first.

“In emergency situations, if the person responsible for carrying others breaks down, everyone is in trouble,” Creeden says. “You cannot care for your children and parent if you are homeless.”

It’s possible for family caregivers to receive payment from Medicaid, a step Creeden recommends taking.

If that’s not possible in a given situation, she suggests reaching out for caregiver support and respite care, even community help.

“Cover the required expenses, but upgrade your mental health and financial stability,” she says. “Arrange your finances so that saving becomes a required expense. Stop putting yourself last, or you will not last.”

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Sandwich Generation Feels Financial Squeeze in Caring for Parents, Kids originally appeared on

Joanna Swanson

Joanna Swanson is Europe correspondent at the Thomson Reuters Foundation based in Brussels covering politics, culture, business, climate change, society, economies and inclusive tech. With specific focus in breaking news, she has covered some of the world's most significant stories.