Financial stress: Strategies for the sandwich generation

My husband and I are millennials who expect to be part of the sandwich generation soon. The term “sandwich generation” refers to those who support both an aging parent and a child. As I read the responses to the Ask the Readers article, Are you planning to care for an aging parent, it looks like we have plenty of company, and statistics from the Pew Research Center seem to substantiate that. (http://www.pewsocialtrends.org/2013/01/30/the-sandwich-generation/):

“Nearly half (47%) 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 (age 18 or older). And about one-in-seven middle-aged adults (15%) is providing financial support to both an aging parent and a child.”

Though we are in our 30s, our parents are aging and increasingly need our help. In the next few years, we anticipate at least one parent, if not all of them, will be living with us. And we have a toddler.

Planning to Support a Multigenerational Household

So we have started to think about and make plans to support a multigenerational household. It is very common in our culture; but that doesn't make it any easier to plan for all the financial and logistical issues that arise when the rubber actually meets the road.

There are lots of logistical issues — emotional, physical and financial — to address and plan for; but in this post, I will address only the financial aspects of being part of the sandwich generation.

When it comes to financial planning for anyone other than you, communication and early planning are key. And what you discuss and plan with your parents will be different in many ways from what you think through with your kids. Still, it is important to come up with a plan of action.

Here are some of the issues as I see it:

Your Parents

  • Talk finances. It's obvious that you need to know where they stand with their finances. Will they only need your physical and emotional support or will they need financial support as well? If they need financial support, can you quantify the shortfall? Can the shortfall be addressed by some other means such as social security or veterans benefits?
  • Know their medical condition. It is important to know their medical condition so you can plan for them to receive proper care. Sometimes a difficult medical condition spills over into their finances too. For example, you might be under the impression that they are doing great, but they could actually be ignoring their finances altogether or avoiding facing a financial challenge.
    Unfortunately, for diseases like Alzheimer's and Dementia, changes in the brain may begin 10 to 15 years before a diagnosis is made. It is heart-breaking to see those who raised you well slip up; but respectfully keep an eye out.
  • Educate them on recent scams. If parents feel they don't have enough to retire on, they might get desperate and fall prey to sneaky salespeople who sell them supposed high-return investments that are essentially scams. There are plenty of scams that target older people. Your parents might think they are doing it to help you, so having an ongoing dialogue about how scammers operate will help protect everyone concerned.
  • Gently nudge them to take care of their estate planning documents. No one really likes to talk about plans after they are gone, but it is essential that they have their estate planning documents in order. At a minimum, do they have a financial power of attorney? What about health care power of attorney?

In the Ask the Reader article about caring for aging parents, Akoilady left this comment about the subject: “The Five Wishes booklet is very good in guiding these discussions and I think you can order them online…I'd use Google to get the site.”

  • Talk to them about long-term care plans. If your parents are young enough to get a long-term care plan, it might be wise to investigate those options together. It is important for you to understand how they work as well since you might be the interface with the insurance company when that time comes.
  • Know their choices for final arrangements. This is another very difficult topic to bring up, but we all have our choices. Know theirs.
  • Respect their decisions and choices. Finally, yes, you have their best interests at heart; but they are their own individuals. Letting them make their decisions for as long as possible is a good thing in many respects.

As Holly put it in her comment: “I have 6 people who rely on me. It's time-consuming and draining. The best advice I can give is do what you can but ultimately it's their decision to move or not to move. The hardest part is taking a tough stance and not enabling them to stay there. This includes NOT listening to their complaints and issues about the choice they made. I lovingly say “It breaks my heart to hear you're suffering needlessly. Do you want to change it?” If she says no, then I say we need to talk about something else.”

Your Children

  • Saving for college. If you have young children, decide if you are going to pay for their education and start saving for it. Never sacrifice your own retirement savings in favor of saving for their education. They can get a loan for college, but you can't get a loan for retirement.
  • Teach your children good financial habits early on – by modeling them.
  • Involve your kids. When it comes to running a multigenerational household, it is important that your children learn to help and take on some of the responsibility. The bond they will create with their elders will be very beneficial to them. I was responsible for taking my grandparents to their doctors. After a while, I was their only transportation. I enjoyed going places with them. They are gone now, and I miss them terribly.
  • Adult children. If you have adult children that need your support, create a plan for the degree of financial support you can comfortably afford. You can offer them a one-time payment, or piecemeal support where you would pay some essential bills, provide them support for a certain period of time, etc.
  • Set the terms and expectations of your support and clearly communicate them with your children. Are they responsible for rent or certain household chores or is there a deadline for your support?

You

You are the important part of the equation here. You have to know your capabilities and limits before you take on any responsibilities.

  • Get your financial house in order. If you have any debt, make it your priority to pay it off. Look at your own retirement savings and see if you are saving enough. Make a budget and re-evaluate your priorities. Update your emergency fund now that you are caring for more people.
  • Educate yourself. Know what resources are available for you to tap into — Medicare, Medicaid, veterans benefits, social security, any advocacy group, etc. It is a lot easier not to miss anything if you do the research before you need these benefits instead of trying to find something out in a hurry.
  • Research care options and create a care plan. If you are working full time and your parents will need care, how are you going to handle it? There are many possibilities for your parents — aging in place, in-home geriatric care, independent living, assisted living, nursing home, adult day care, your quitting work to care for your elders, etc. What will work for your family? Do you know the cost involved? Do you have a plan to pay for your choice? If you quit, how will you save for your own retirement? How will any of these choices affect your family finances?
  • Create the right support team. This is also one of those things that is a lot easier to research before it happens than when you need it. When I speak of the right support team, depending on your situation, it can be any combination of a financial adviser, estate planning attorney, accountant, elder care associate or even a geriatric care manager. Learn about your county's ombudsman program for the elderly. Having the right person to talk to when you need help can save a lot of time and money.
  • Join a support group. If you are caring for a person with a specific medical condition, look for your local support group and get help.
  • Discuss responsibilities with siblings. You will need all hands on deck.
  • Understand the tax implications. There might be some tax advantages available to you that can help you care for both your parents and kids. Consult a tax professional and take advantage of them all.
  • Take care of yourself and your marriage. This is THE most important thing you can do to manage the multigenerational household. All along the way, make the kind of decisions that secure your retirement.

This is by no means a comprehensive list. It is a very emotionally charged situation, and each person's experience will be different. I just wanted to draft something as a starting point to kickstart the conversation about preparing to support aging parents and children.

Early planning is always the key!

How would you add to this list of what it takes to support family members — either young or old? What should others know that will help them prepare?

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Emma
Emma
5 years ago

Excellent list! I’m enjoying your articles, Suba 🙂 I especially like the point about looking after your finances and marriage so you’re better able to help others.

The only thing I would add is to be ready for emergencies. It’s easy to fall into the trap of thinking you have more time, or that you can ease into the changes as your loved one ages. Then cancer or a stroke hits, and your life can be turned upside down so quickly.

AMW
AMW
5 years ago

One thing that I suggest with aging parents is having some of these conversations BEFORE you need to have them. Make it clear what you can and can not do for them. My parents sold their house and built an apartment on to my brother’s home while they were still young enough and vital to do it (yes, they actually physically built it) but put in extra wide doors and a curbless shower in the event that they would need those things in the future and could stay at home as long as possible. Then there are my in laws… Read more »

BH
BH
5 years ago

How do you balance a choice between caring for your or your spouse’s elderly parents with providing and saving for your children? If there is a tradeoff between sending your kids to great schools and providing your parents a nicer lifestyle than what they saved for, what is the right choice?

Jenn
Jenn
5 years ago
Reply to  BH

Perhaps you weigh the choices in part by asking yourself how you would/will want to be treated by your children when you are elderly. What behavior do you want to model for them?

phoenix1920
phoenix1920
5 years ago
Reply to  BH

While determining the right choice will vary on the person, a priority for us is to make sure I won’t put my children in that type of vice. I have seen first hand from my ILs after they were so busy taking care of their parents and one of their children and let their finances suffer. They now are working all the time, with their health deteriorating, in an attempt to crawl out of that hole. Worse, being sandwiched by responsibilities to both a parent and a child at the same time did not result in lovely quality time–instead, it… Read more »

SLCCOM
SLCCOM
5 years ago
Reply to  phoenix1920

That’s “vise.” Not “vice.”

KMPM
KMPM
5 years ago
Reply to  BH

I don’t have an answer for this, but I wanted to say that it’s a really great question. I hope someone else will respond with their experience.

Paul
Paul
5 years ago

This article has a great list to start the process. My parents are already deceased. My wife’s parents are divorced and both re-married. Her father is in good shape financially and my wife’s sister lives nearby, along with several other relatives. We know a lot less about her mother. Her husband has been in poor health for a long time and she is 73 years old. She refuses to talk about her finances. I don’t think she’ll be willing to address this until her husband passes away. We have no idea what her plans are. We have room for her… Read more »

Meg
Meg
5 years ago

My in laws have made poor financial choices including deciding to stop working years before they would be financially able to. My husband and I worked 5 minimum wage jobs between us to get ahead in life amd now in our mid 20s we finally have our heads above water. Keeping our financial house in order is a priority to us. I love my inlaws but I’ve come to terms with the word “no” when I feel like they are asking for support I can’t give them without sinking my own ship. Early on we told them “we are all… Read more »

phoenix1920
phoenix1920
5 years ago

Two things seems to be missing to me. (1) How to handle the relationship side of the equation, if they are moving in. Most of us know or have heard about bad roommate situations when we were in that stage. Having other parents who have their own rules and ways of doing something can be very difficult, particularly if the adults moving in don’t have the same sense of their limitations as you do. Seeing this happen, I saw a grandmother who did not like to think of herself as needing help so she tried to do the same chores… Read more »

scott
scott
5 years ago

definitely a sandwich generationer but closer to moving on to just the kids……both my parents recently passed away and a tremendous weight was lifted from our (my wife and siblings) shoulders. my dad had mylodysplasia and needed weekly rides to and from the hospital. living closest and a flexible work schedule the responsibility was mine. mom had alzheimer’s and was in a care facility for the last 3 years near my sisters. now my wife’s parents are getting more needy (aid to radiology etc.) one still barely drives and one is more or less bed ridden. thank goodness they are… Read more »

SAHMama
SAHMama
5 years ago

Nope, nope and nope. Poor relationships = NOPE. My father is alcoholic and abusive. My mother has OCD and is abusive. They are divorced. My inlaws are Bible thumping hypocrites who have said my kids are going to H-E- double hockey sticks. However, I do expect to become my sibling’s legal guardian in the not too distant future.

Lisa
Lisa
5 years ago

One thing I will add in the finance category is to make sure that your parents are getting what they need out of services they are paying for. For example, I recently learned that my family member has had the same cell phone plan for 6 years (!!), is using the advances in technology (data services) and is paying for each time she uses those services. She is paying far more than she should and the only reason she hasn’t updated her phone and contract is that she needs help in understanding the plans and phones. There was a similar… Read more »

Karen Haynes
Karen Haynes
5 years ago
Reply to  Lisa

I was recently talking to my parents and mentioned how much my pre-paid mobile phone plan cost.

Two weeks later my dad said “So, I took your advice”!
He called his phone/internet provider and was able to more than double his data, install a VoIP phone to avoid call costs and get on-demand TV, all for less than the price he was paying before.

Here, the power of my own story, was enough to nudge him into checking he was getting a good deal.

Laura
Laura
5 years ago

We were part of the sandwich generation until my m-i-l finally passed 6 years ago. She had dementia and blew through her money long before the dementia was officially recognized, something I attribute to the fact that she was abusive and dysfunctional prior to any physical decline. She refused to leave the house and her doctor refused to see her unless she came to his office, so no diagnosis until near the end. Social Services saw us as the greedy children trying to get her money and house (we got neither), and told us repeatedly that it was her money… Read more »

Holly Murs
Holly Murs
5 years ago

Being part of the sandwich generation is probably one of the toughest situations to be in. But with these tips, adults who find themselves in the middle of these responsibilities can cope better and find better ways to hedge financial risks. This is a must-read for everyone regardless of age, so we featured it in our Weekly Digest. You can read it here https://www.ltcoptions.com/weekly-digest-different-long-term-care-options/.

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