Financial challenges of the “sandwich generation”

By Patricia L. Hunter, CFP®

What is the “sandwich generation”? This term refers to middle-aged individuals who are simultaneously caring for and supporting their children, as well as their aging parents.

They have been given that label because these individuals are effectively “sandwiched” between the obligation to care for their aging parents — who might be ill, unable to perform various everyday tasks, or in need of financial support — and children, who require financial, physical and emotional support.

As life spans of the elderly lengthen and adult children live at home longer, the generation in the middle is being financially squeezed.

A 2012 Pew Research Center study estimated that 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 (age 18 or older). And about one in seven middle-aged adults (15 percent) is providing financial support to both an aging parent and a child.

The burdens placed upon the sandwich generation require considerable time and money. In some cases, they are having to postpone their own retirement because of the added financial obligations. In addition, some members of the sandwich generation are even more overextended by having to care for their grandchildren, as well.

Where does this leave the sandwich generation, financially? The challenges can be considerable. The majority are not prepared for the future. They are stressed by the demands of financially supporting grown children and aging parents and struggling to save for their own needs. Many have not been able to build a robust emergency fund or healthy retirement savings accounts because they did not plan to be in this situation.


This is where financial planning can play a critical role.

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Having an established financial plan or working with a financial planner might help these individuals to feel less stressed and overwhelmed by their situation. A financial plan will not only help them map out what they need to do to meet their goals, but it can also boost their confidence and sense of well-being. One of the best strategies to feel more financially secure and have a greater chance to meet financial goals is to work with a financial planner who can develop a personalized plan that incorporates the individual’s unique situation and objectives.

A financial planner can help to establish an emergency fund or suggest ways to add to an existing emergency fund. Many individuals think that they do not have enough extra cash to start an emergency fund, but people can begin with any amount, no matter how small and increase over time. One way to build the emergency fund is deposit any extra money that you receive into the fund, such as a tax refund or bonus. What’s important is that in the future, unforeseen expenses will not result in increased debt from using credit cards or loans. Remember, an emergency fund should only be used for true emergencies, such as medical bills and home and auto repairs.   

Helping individuals plan and save for retirement is a specialty of many financial planners. Saving for retirement might be hard to imagine for individuals who are financially stretched with the expenses of caring for elderly parents and supporting grown children. According to the Economic Policy Institute, the average retirement savings for the families of people in their 50s was $124,831 in 2018. For the families of people ages 56 to 61, it was $163,577. Unfortunately, these numbers are nowhere near the amount that will be needed to retire comfortably at the current cost of living.

The most important thing is not to let disappointment about your current savings keep you from making changes — remember, the sooner you start, the more you can save. If you have not already done so, take the first steps towards retirement savings now. A financial planner can assist in helping to determine what you will need and setting goals. They might make suggestions about what needs to be done differently to reach goals, including how much you need to save. A financial planner might also recommend what types of retirement accounts to use such as an IRA, Roth IRA, 403(b), or 401(k) plans.

How to lighten the load, financially.

There are some actions that members of the sandwich generation can take to ease the financial burden.

First, there should be open discussions about finances between all parties. Determining if your aging parents have savings or a pension to offset some of the financial burden will make it easier for you to manage their finances, as well as your own. If needed, there are non-profit organizations and government programs that provide guidance and support.

When it comes to adult children, the goal is getting them to contribute financially to the household and to eventually become independent. There are many ways to accomplish this goal, but one of the easiest is to set expectations that when your adult child lives at home, they must pay room and board, at or near market rates. This eliminates the so-called “mom and dad discount” that allows them to have a more lavish lifestyle than their finances can support.

With proper planning, younger workers who are currently entering the workforce might be able to avoid the financial stress of the sandwich generation. In addition to establishing an emergency fund and saving for retirement, they must also plan to care for elderly parents or adult children. Having a well-constructed financial plan that includes savings, spending and expense strategies will go a long way toward eliminating financial stress and achieving financial wellness.


Rev. Dr. Patricia L Hunter, CFP® brings 30 years of experience to her ministry as Director of Financial Wellness Programs. Before joining MMBB in 1987, she served as assistant pastor of the Mount Zion Baptist Church in Seattle. Hunter also has a Master of Divinity degree from Colgate Rochester Crozer Divinity School and a Doctor of Ministry degree from the Saint Paul School of Theology in Kansas City, Missouri.

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