An increasing number of people in their fifties and sixties are finding themselves caught in the “sandwich generation,” a financial and emotional squeeze.
If you are struggling to cope simultaneously with the costs of caring for aging parents while you help your children pay for college or launch careers–while funding your own retirement–you’re in the sandwich generation.
Sandwich Generation: A New Trend
The demographic trends that combine to create this new sandwich generation are relatively new. Until recently, the need to at least partially support both aging parents and adult children simply didn’t exist, and most people in their fifties and sixties weren’t part of a sandwich generation.
The sandwich generation was caused in part because lifespans today are much longer than in years past, and an increasing number of retirees or near-retirees have aging parents who require costly nursing home or in-home care. At the same time, many of these same people have children who are still in college or who may return home once or twice after college or between jobs in an effort to get on their feet. Thus, the sandwich generation was named.
Sandwich Generation: Number of Aging Parents and Dependent Adult Children on the Rise
Increasing lifespans increase the sandwich generation size.
According to the Journal of Financial Service Professionals, at the beginning of the 20th century between 4% and 7% of people in their sixties had at least one parent still living. Today, that figure is nearly 50%. And people in their sixties who end up caring for an aging parent often feel they are getting a preview of what they may experience emotionally, physically and financially as they age—and at a time when they are confronting their own mortality more keenly than ever before.
But that’s only half the story. As recently as 1990, only 25% of young adults between the ages of 18 and 24 lived with their parents. By 2000, the number had grown to 52%—and it’s still rising, putting more older adults into the sandwich generation–caring for aging parents and adult children.
How to Avoid Sandwich Generation Problems
If you’re already in your sixties, or nearly, and feeling the financial squeeze of the sandwich generation, there are still a few things you can do to lower your stress level and increase your peace of mind. You might consider working a little longer, trimming your expenses, and urging your kids to explore every option for college financial aid—especially merit grants or scholarships that neither of you will have to repay after they graduate.
If you’re in your forties or fifties, chances are you have more time to plan and make preparations before you find yourself caught in the sandwich generation. Regardless of your age, however, here are a few steps you can take that may help you manage the needs of your aging parents and adult children without getting squeezed by sandwich generation problems:
- Preserve Your Assets—Don’t be a sandwich generation martyr by raiingd your retirement savings to pay for your children’s college education or your parents’ long-term care. Your kids can take out student loans if necessary, and you should use your parents own assets to finance their care for as long as possible.
- Plan Ahead—Keep the sandwich generation trend in mind when you’re projecting what kind of income you’ll need in retirement. Be sure to consider the possibility that you’ll end up in the sandwich generation–one or more of your kids may need to come back home for awhile, raising your monthly costs or maybe delaying your plan to move to a smaller home. And if you have one or more parents still living, count on joining the sandwich generation as your parents may also need your financial help.
- Assess the Situation Before Sandwich Generation Problems Arise—As early as possible, consider sandwich generation issues. Talk with your parents about their assets, how they want to live as they age, what kind of health care and lifesaving measures they do or don’t want, and who should make legal and medical decisions for them if they are no longer able to handle their own affairs. This may be a difficult and uncomfortable conversation for you and your parents, but answering these questions while there is still time to plan ahead can help you both avoid a lot of sandwich generation problems.
- Get Insurance—Sandwich generation members need to plan for the future. Look into the viability of long-term care insurance for your parents and yourself. Whether it is right for you depends on several factors, including the cost of the coverage, how long you might need it, and what kind of benefits you want. If you or your parents eventually require nursing home care, however, long-term care insurance could help offset those asset-draining costs.
- Put Yourself First—Because you’re both a conscientious parent and a dutiful child, you may be tempted to put your own needs after those of your aging parents and adult children if you find yourself in a sandwich generation scenario. Don’t.The only person who can save for your retirement is you. To avoid many sandwich generation problems–and help your parents and your children–you first have to keep your own financial house in order.
Finally, don’t forget that being part of the sandwich generation and caring for others can be hard on your physical and emotional health as well as your financial well-being.
By Sharon O’Brien