Budget Tips for the Sandwich Generation

Three generations of women and a piggy bank

In the early 1980s, demographers took note of the so-called "Sandwich Generation," members of the baby boom who were caring for aging parents while they still had young children at home.

Since then, the Sandwich Generation has grown noticeably larger. Americans are living longer—the life expectancy is now 78.8 years—but older Americans are not necessarily healthy nor independent during those bonus years. They may have outlived their money. More Americans than ever are providing hands-on and financial assistance for senior loved ones. They might be caring not only for aging parents, but for grandparents and even great-grandparents!

Meanwhile, these days the "small children at home" aren't so small. A May 2016 study from Pew Research reported that today, the No. 1 living arrangement for Americans aged 18 – 34 is with their parents, rather than living alone or with a spouse, partner or roommates. Demographers speak of this new life stage as "emerging adulthood"; pundits use the term "boomerang kids." What’s behind this trend? Young adults today settle down with a spouse or partner at an older age. Changing economic conditions mean it's harder to establish a well-paying career right away. They are more likely to attend college, which delays their entry to full-time employment and may leave them with sizable student loans. They might be living with Mom and Dad while they save up a down payment for their first home. If a marriage breaks up, adult children might move home, perhaps bringing grandchildren who add yet another layer to the sandwich.

These demographic changes come at a substantial cost to members of the Sandwich Generation. A recent survey from TD Ameritrade showed that today, 20 percent of Americans provide financial support to a parent or an adult child, at an average cost of $12,000 per year, and they're more likely to be in debt. Pew reports that half of all adults have provided financial support to grown children during the past year; 27 percent were providing primary support. These extra years spent in the middle of the sandwich are expected to take a long-term financial toll on baby boomers and members of Generation X (those born between 1965 – 1979). Sandwich caregivers must live a more frugal lifestyle. They work longer and give up retirement goals such as travel or remodeling their home. Most concerning, many of these caregivers are failing to save for their own retirement and future long-term care costs.

If you're a card-carrying member of the Sandwich Generation, it's time to take a realistic look at your financial well-being. Here are eight steps to take:

Create a budget. If you've never put it all in writing, now is the time. Studies show that few elder caregivers or parents of adult children have an accurate picture of how much they are spending. Don't forget to factor in expenses such as food, cellphone and cable bills, and health and car insurance. And don't forget the "flight attendant rule": Put your own oxygen mask on first! What will it take for you to stay out of debt and put away money for your own retirement and future healthcare needs?

Share your findings with your parents and children. You don't need to disclose your full financial picture, but you do need to explain the basics. This will help Mom and Dad understand when you can't take more time off work or travel more to visit them if they live at a distance. It will demonstrate why you can't help adult children with luxuries. Psychologists say being open about money helps nudge children toward greater independence. Go ahead and play your ace: Remind your children that saving for your own retirement and care makes it less likely that this responsibility will fall on them someday!

Don't be afraid to set boundaries. Every family has its own dynamics. You might have very independent parents who say "Please don't do anything for me" and adult children who are out on their own as soon as possible, both of whom have the wherewithal to make that happen. Yet a study on intergenerational interdependency from Merrill Lynch Wealth Management found that in many families, one member is thought of as "the bank"—the person family members turn to for financial help. If you can't afford to be "the bank," it’s important to say so—and to learn to say no.

Lower costs by presenting realistic expectations. Have a frank discussion with senior loved ones about the cost of various care options and what you and they would be expected to pay. And early in your children's college planning process, set out the facts about financial limitations: Living at home, choosing a school with in-state tuition and going to a community college for the first two years can save many thousands of dollars. They needn't go to the priciest, most prestigious college to get a good education. Let children know how much of the tab they will need to pick up through savings, working part time and perhaps student loans.

Do some homework to locate financial resources. From scholarships for the kids to Meals on Wheels for the folks, don't overlook resources that can help. Contact the local senior services agency about assistance programs for older adults. Be sure your loved one is getting all they can from their retirement benefits, Social Security, Medicare, Medicaid and veteran's benefits. Find out if you qualify for caregiver tax breaks. And well before children begin applying to colleges, learn about financial aid such as scholarships, work study, grants and loans.

Bring in the experts. As a dual caregiver, your financial life is complicated! Financial planners, elder law attorneys, geriatric care managers and college admission advisors can help you create a realistic budget and locate the resources for your parents and children. These services can quickly pay for themselves. And these professionals can prevent some of the emotional pitfalls so common during conversations about money, keeping things businesslike when they need to be. A poll in the June 2016 issue of Caring Right at Home showed that about half of our readers felt they could use some help in this department!

Talk to other relatives. If an ex-spouse or co-parent is partially responsible for your children's expenses, college is a good time to revisit their contribution. And are your siblings paying their fair share for the care of your elderly parents? So often, one adult son or daughter tends to be nearby when Mom needs something repaired ... or reaches for their checkbook at the pharmacy when the copay of Mom's prescription is higher than expected ... or must pay to install a wheelchair ramp and make other pricey modifications to their home if their loved one lives with them. Many of us find it hard to ask for help, but it's important to work with your siblings on a fair division of elder care expenses.

Protect your career. If you have a job outside the home, you might be tempted to resign or to cut back on your hours, especially if your children are young or your parents' care needs are great. But this can be a very bad decision for your own future financial well-being. Many caregivers report that when they later return to the workplace, it is hard to get back on track. One solution is to involve the generations in caring for one another. Depending on your living situation, the age of your children and the health of your parents, it might be possible for older children to provide more care and assistance for elderly relatives, or for senior loved ones to care for smaller children. If professional care is the better choice, talk to other family members about sharing the cost of professional in-home care.

Caregivers whose loved one has Alzheimer’s disease or other dementia face extra challenges, both financial and emotional. Read the next article, "Seven Stress-Busting Tips for Alzheimer's Caregivers," to learn more.


Right at Home, Inc. is a national organization dedicated to improving the quality of life for those we serve. We fulfill that mission through a dedicated network of locally owned providers of in home care services.