Who Is the Sandwich Generation and What Are Their Challenges?

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You’ve probably heard a lot about Baby Boomers, Gen X, Millennials, Gen Z, and other generations, but have you heard about a group of people known as the “sandwich generation”?

The sandwich generation can include adults from a variety of these age groups, but it generally refers to anyone who is caring physically, mentally, and/or financially for both older and younger loved ones, such as a child and an aging parent.

Traditionally, it’s most common for adults in their 40s and 50s, but there are lots of ways we can all become ‘sandwiched’ between caring for younger and older family members. As people are living longer and many young adults are struggling to gain financial independence, about a quarter of U.S. adults (23%) are now a part of the sandwich generation, according to a Pew Research Center survey.

The common theme across the board is that it can add pressure to your everyday life and long-term financial plans, especially if you neglect to address your own needs along the way.

Challenges for the Sandwich Generation

Women in particular tend to find themselves in this position after having children. Mothers in the sandwich generation, ages 35-54, report feeling more stress than any other group as they balance the acts of caring for their growing children and their aging parents, according to the American Psychological Association.

In addition to mental health and overall financial wellness, planning for retirement can be a greater challenge for members of the sandwich generation. Individuals focused on raising young children, paying for childcare and education costs, as well as providing financial support to aging parents often find it difficult to focus on their own financial futures and set aside the necessary funds for retirement.

One way to help juggle it all is through building a relationship with a trusted financial advisor who can help you navigate all of life’s phases.

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How to Plan Ahead & Maintain Financial Stability

In addition to the standard legacy planning and estate planning conversations you should be having regularly with your family regardless of age, income level, or current health, there are some additional steps and strategies you can consider to help maintain financial stability for yourself and your family if you find yourself ‘sandwiched’ between generations.

Plan ahead for your family’s long-term care.

Have open and honest conversations with your parents and other aging family members about their wishes, their finances, and whether they have the right mix of insurance, investments, and other income to pay for the expensive costs of long-term care. This could include any combination of assisted living, in-home care, or moving in together to consolidate costs. We have a free, printable checklist that can help start the discussion.

Plan ahead for your own retirement.

Contributing to a 401(k), IRA, and/or other retirement accounts can help ensure you have the necessary funds when you’re ready for your own retirement. Planning ahead with the help of a trusted advisor can help ensure your nest egg is tax advantaged and invested strategically to support your goals.

Take advantage of tax benefits for seniors and children enrolled in higher education.

There are a variety of tax credits and deductions for seniors that can help reduce costs, as well as similar deductions for children of a certain age enrolled in higher ed. A good financial advisor will get to know the whole family, so they can help ensure your contributions and reductions are optimized. More on that below.

Set up family trusts for each generation.

A trust isn’t necessarily reserved only for the wealthy. There could be a variety of reasons to set up a trust for greater control over when and how your assets are distributed to both your children and parents. Your advisor can help determine if a trust could make sense for your family, in addition a will and other documentation.

Consider buying your parents’ home and leasing it to them.

If it makes sense to keep your parents’ home and you can afford to buy it, the profits from the sale could help them financially support themselves without moving out. You’d also earn equity at the same time and could consider moving into the home or renting it out later.

Set up a tuition or childcare fund even if you don’t currently have children.

If you think there’s any possibility you may have children in the future, it’s great to start saving now to help cover the costs of childcare and eventually school tuition. If you’re more financially prepared for the costs of parenting, it may be more manageable to take on some costs for aging parents when the time comes.

Make sure your financial advisor gets to know the entire family dynamic.

Our CFS* Financial Advisors are dedicated to supporting their clients throughout many stages of life and getting to know their family dynamics along the way. This becomes especially important when you have multiple generations to care for and lots of decisions to make. A trusted advisor can help take everything into account and provide a complete picture of your finances to support your decision-making.

While surrounding yourself with family or living in a multi-generational home can be one of life’s greatest joys, it’s important not to over-extend yourself and abandon financial planning along the way. When handled the right way, a lot of the tension and uncertainty can be eliminated, so every generation can feel prepared and secure.

*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. ("CFS"), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of Citadel, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. Citadel has contracted with CFS to make non-deposit investment products and services available to Citadel members. CUSO Financial Services, L.P. (CFS) does not provide tax or legal advice. For such guidance, please consult your tax or legal professional. Check the background of these financial professionals on FINRA's BrokerCheck

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