The Sandwich Generation: Caring for Children and Parents

Financially supporting children and aging parents at the same time can create many challenges. You may feel your budget is stretched thin by making sure you and your family are financially cared for.

You are not alone: According to a Pew Research Center study, about 12% of Americans between the ages of 40 and 60 are part of this “sandwich generation” who are simultaneously providing some financial assistance to both a child and a parent.¹ Interestingly, there has been a significant increase in the financial burden, primarily coming from grown children rather than aging parents.

How do you avoid feeling financially squeezed between the younger and older generations? Here are several financial strategies for caring for both children and parents.

Young Children

One of the best things you can do if you have young children is to set aside money early on for their higher education. College will likely only get more expensive in the years ahead, so reduce future college debt by setting up a 529 college savings plan account with automatic monthly deductions from your checking account. The money in the account grows tax free until it’s withdrawn for qualified education expenses. Family and friends can also contribute to the account regardless of who opened it.

Older Children

If your older child is completing high school or in college, encourage them to find a part-time job. This can be a great way to teach them about saving, while also having them take care of a few of their own bills, such as car insurance, cell phone, gas, etc.

If your child is out of college but still living at home, ask them to contribute financially by paying rent and establish a time limit for how long they plan to be at home.

Care Options for Aging Parents

Caring for aging parents has its own challenges. You may be their source of transportation, their health advocate or their full-time caregiver. If your parents have health issues, it may be hard to provide around-the-clock care while holding down your own job and caring for your children. Being a caregiver also takes a financial toll, especially if you need to reduce your work hours or take a leave of absence.

You do not have to do it all on your own. There are resources available such as Eldercare.acl.gov that lists trustworthy local companies providing transportation, meal services, home care or caregiver training. Don’t be afraid to ask for help from other family members as well.

Estate Planning

Having a comprehensive estate plan is an important tool for transferring assets. Importantly, you don’t need to have an “estate” to have an estate plan. An estate plan is a set of legal documents that protects your assets and provides instruction for how you want them passed down. Typically, an estate plan includes a Will, healthcare power of attorney, financial power of attorney and a trust. It creates a plan of action to ensure your beneficiaries are receiving assets according to your wishes and in the most tax-advantaged way.

Take Time for Yourself

It’s not only important but may be necessary to take some time for your own self-care. You won’t be able to care for your loved ones if your own health is suffering.

If you are sandwiched in between two generations, know that Jemma Financial can help all generations get organized with a financial plan so you can save for a child’s education, build retirement savings and create a strategy to handle the financial pressures of caring for children and parents at the same time. Start a conversation today.

1. “More than one-in-ten U.S. parents are also caring for an adult,” Pew Research Center, 11/29/18.