6 Money Strategies for the Sandwich Generation
When her father was diagnosed with a respiratory disease about seven years ago, Joy Frank-Collins juggled her work schedule and parenting demands to maximize the time she spent by his side. Frank-Collins, a 41-year-old who heads her own communications firm in Marietta, Ohio, also coordinated with her siblings to pay for expenses that weren't covered by insurance. "If you know your parents will need your help, you have to think, 'What can I set aside to provide the necessary support for my parents?'" she says. After a long fight with his illness, her father died at age 75 in January.
As a member of the sandwich generation -- adults who simultaneous care for children and aging parents -- Frank-Collins had to navigate what is becoming an increasingly familiar challenge. "Individuals who find themselves in the sandwich generation are forced with contemplating taking care of things today in a way that may negatively impact their future," says Rebekah Barsch, vice president of financial planning for Northwestern Mutual. Family members might cut back on their work hours or sacrifice savings in order to care for aging parents, she adds. "The pressure, both financial and emotional, weighs on people," she says.
Those pressures are one reason that 37 percent of Gen X, who are between ages 35 and 49, don't feel financially secure, according to the 2015 Northwestern Mutual Planning & Progress Study of 5,474 adults. About 1 in 4 said they are "not at all confident" they will achieve their financial goals, and 2 in 10 said they believe they will never retire, largely because they won't have enough retirement savings.
"The number of people who find themselves sandwiched between generations continues to grow as the baby boom generation gets older and is expected to live longer than ever before -- longer than they're capable of caring for themselves," says Phillip Rumrill, a professor of rehabilitation counseling at Kent State University and co-author of "The Sandwich Generation's Guide to Eldercare: Concrete Advice to Simultaneously Care for Your Kids and Your Parents."
At the same time, he adds, children are living at home for longer, which means people in middle age are often caring for, and financially supporting, both generations at once. "We estimate that 1 in 8 Americans between the ages of 40 and 60 are caring for both children and parents or grandparents at once," he says. That caregiving often coincides with intense years of career demands as well as the need to save for retirement.
If you're a member of the sandwich generation, here are six financial strategies to help your family get through the challenge:
Pick your priorities. "Maybe we start saving for college tuition later, or we save less now with the idea of ramping it up later, when our incomes are back at full stride," Barsch says. She recommends making it a priority to continue saving for retirement, but to scale back in other areas, such as spending on luxuries such as vacation and cars.
Stick to a revised budget. Taking on responsibility for parents can make it especially important to hone your budget, says Stacy Newton, North and South Carolina division executive for SunTrust Bank. "Because they have so much on their plates, making a plan is critical. We encourage people to set limits on spending, shopping sales and to stay within their means," she says. When it comes to vacation or holidays, for example, Newton suggests focusing on shared family experiences rather than dollars spent. She also urges people to use their banks' spending alerts to stay within budget.
Give yourself an annual checkup. "It's like going to the doctor," Newton says. "Take a few minutes off work and sit down with a financial adviser to review current financial priorities, and make sure everything is aligned." A recent SunTrust survey of 519 adults with incomes $75,000 and up found that among those in middle age (ages 45 to 54), just 37 percent say they are saving enough to live comfortably in retirement, compared to 57 percent in other age groups. An annual check up can help determine where you stand and what adjustments need to be made.
Plan for eldercare. While parents often anticipate the costs that come with children, they are less likely to budget for the expense of caring for their parents, Rumrill says. Those costs can include paid caregivers, a nursing facility or medical expenses, he adds. Budgeting in advance, as well as checking for any available benefits through the federal government, particularly Social Security or veterans' benefits, can help ease some of that pressure, he says.
Make use of new technology. Kyle Hill co-founded HomeHero.org, a website that helps families find and hire in-home care for seniors in California and has plans to expand to other states in 2016. Users can browse caregivers and also use the site to make payments. For Hill, the need is personal: He watched his father struggle to care for his 98-year-old mother from a different state. "There was no easy way to manage her care from far away," he says, particularly to oversee caregiver shifts and activities. Automating the process through a website makes it easier and more affordable for family members to find high-quality, paid caregivers, he says.
Coordinate with siblings. Lan Jewel, 45, a communications professional in New York, worked out a plan with her four siblings about 15 years ago, before any of them had the additional financial pressure of children. Her parents had limited savings, so the siblings all chipped in to purchase long-term care insurance, and some also send money to them once a month. "It has definitely put a strain on our relationships since the financial burden has increased," she says, and the stress from the Great Recession didn't help. "But this is an obligation that I feel I have to juggle, even as the expenses of rearing two children in New York City increase as my kids get older. My parents sacrificed so much for us kids," she says.
Frank-Collins also suggests working through any tensions with siblings and other family members before a health crisis hits, because coordination becomes essential. "We would almost tag each other out at the hospital," she recalls, referring to the frequent bedside visits when her father was sick. "You have to sit down and have these conversations that you never thought you would have. Because you're the person in the middle, you have to prepare."
Kimberly Palmer is a senior editor for U.S. News Money. She is the author of the new book, "The Economy of You." You can follow her on Twitter @KimberlyPalmer, connect with her on Facebook or email her at firstname.lastname@example.org.