The Sandwich Generation - Taking Care of Children and Parents

Identifying who the sandwich generation is, and what they are doing to help ease the strain of financial planning when taking care of kids while helping aging parents, and trying to save for retirement.

Granddaughter, mother and grandmother sitting on a couc

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A family dynamic has emerged for many Americans who are saving for retirement but are also taking care of aging parents as well as children. We look at the demographics of this generation, their challenges, and how they can help prioritize expenses from college to long-term care.

The 76-plus million Americans who were born between 1946 and 1964 laid way for an echo boom generation that is projected to out number the baby boomers this year. 1^Pew Research Center Tabulations of U.S. Census Bureau population projections released December 2014 and 2016 population estimates.Today, it is estimated nearly half (47 percent) of adults in their 40s and 50s have a parent age 65 or older and are either raising a young child or financially supporting a grown child.2^Pew Research Center, “The Sandwich Generation: Rising Financial Burdens for Middle-Aged Americans.”2013. 

This situation has become so common place that in 2006 Merriam-Webster added the term “sandwich generation” to the dictionary, labeling this group of adults raising a child and caring for a parent. As the baby boomer generation ages, and the Millennial generation becomes the largest in history, more and more of these echo boomers are feeling the squeeze of being a parent and being there for their parents. 

Who is the Sandwich Generation? 

The sandwich generation consists of a wide age swath. The majority of the cohort, is middle aged: 71 percent of the group is 40 to 59 years old. The same study reports an additional 19 percent are younger than 40, 10 percent are 60-plus. There are no significant differences along gender lines, men and women are equally represented.2^Pew Research Center, “The Sandwich Generation: Rising Financial Burdens for Middle-Aged Americans.”2013.

Almost half (43 percent) of those with income of $100,000 or more, have a living parent age 65 or older and a dependent child. Accordingly, married adults are more likely than unmarried adults to be sandwiched between one of the sets of parents and their child. Some 36 percent of those married are part of the sandwich generation; compared to 13 percent of their single peers.2^Pew Research Center, “The Sandwich Generation: Rising Financial Burdens for Middle-Aged Americans.”2013.

How is the Sandwich Generation Coping?

According to the T. Rowe Price 2019 Parents, Kids & Money Survey, more than a third of parents with 8 to 14-year-old kids are caring for an aging family member. Of that group, 68 percent has an older family member living with them. 3^T. Rowe “2019 Price Parents, Kids & Money Survey.” 2019. Of course, care and financial support for both parents and children are only part of the equation, nearly 38 percent say both children and parents rely on them for emotional support.2^Pew Research Center, “The Sandwich Generation: Rising Financial Burdens for Middle-Aged Americans.”2013.

A Pew Research study found that, "while the sandwich generation may find themselves pressed for time as they prioritize family needs, the vast majority are happy with their lives, a full 52 percent say they are pretty happy. These rates are consistent among other adults, where 51 percent are pretty happy.” 2^Pew Research Center, “The Sandwich Generation: Rising Financial Burdens for Middle-Aged Americans.”2013. 

What’s Next for the Sandwich Generation? 

While this is positive news that families who find themselves prioritizing saving for kids’ college, helping aging parents with their financial needs, as well as trying to factor in their own retirement savings are faring well emotionally, creating a plan and strategy for the long-term can help maintain stability in uncertain times.

To help this emerging generation of future retirees, we outline four key tips to long-term stability: 

1. Prioritize yourself

Although the sandwich generation reports general happiness, it also reports feeling rushed. The Pew Research study reports. "31 percent of these parents say they always feel rushed even to do the things they have to do." In contrast, other adults, report feeling rushed 23 percent of the time.2^Pew Research Center, “The Sandwich Generation: Rising Financial Burdens for Middle-Aged Americans.”2013.

Finding small ways to make yourself a priority, can make a big difference. This can be as true with time as with finances. Time is valuable, and only grows more valuable as retirement nears. The measures taken today can lessen the need to play catch up.

2. Talk things through 

It's a good idea to get everything out in the open, as you talk to your parents about their approach to the golden years. This way you can talk through retirement outlook, insurance and outline a general plan. Find out if they have a financial representative they have been working with.

3. Insure your retirement 

The No. 1 goal of working pre-retirees is securing lifelong income.4^IALC, “Retirement Readiness Survey.” 2018.Safe money options like fixed index annuities can offer lifetime income options that protect years of hard-earned dollars and can generate a stable source of income that cannot be outlived. Consider your overall retirement portfolio and how different retirement options address short- and long-term financial needs. A balanced portfolio can be key to planning for lifetime income as well as long-term care options.

4. Meet with a financial professional 

Taking care of the day-to-day needs of both children and parents can feel like second job. Unfortunately, so can planning for retirement. Talking to a qualified financial professional can help you identify options and chart a course that encompasses funding family needs while working toward retirement goals. 

 

Footnotes:

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