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    The Sandwich Generation Survival Guide

    Ashley DonohoeBy Updated:11 Mins Read

    Taking care of your own bills and needs can be hard enough. But the many Americans in the “sandwich generation” have to survive while keeping themselves afloat and being responsible for kids and aging parents. Not only is it stressful managing those competing priorities, but it can also complicate your career and finances. 

    It often feels like you’re constantly deciding between planning for retirement, saving for the kids’ college, and handling your parents’ care needs. Plus, it can all hit you at once. Finding the right balance isn’t easy. Some 77% of these caregivers are behind financially, and 86% came in unprepared, according to a Care.com survey.

    From watching family members go through all of this, I’ve identified some important financial tips and strategies that can make juggling everything less damaging financially. Here’s my sandwich generation survival guide that you can use to get started.

    Build Yourself a Safety Net First

    While you might be worried mostly about helping your parents and kids, you can’t do that well if you don’t protect your own finances first. Having multiple people relying on you means it’s even more important for you to:

    • Know your situation. This includes what’s in your bank and retirement accounts, how much debt you owe, and whether you’re struggling in a certain area financially. If you’re drowning in credit card debt, for instance, you may need to handle that before you can afford to start funneling money to your kids’ college savings or parents.
    • Have an emergency fund. Sick kids, your parents’ emergency relocation, a broken-down family car, or other unexpected trouble could leave you needing funds quickly. Have at least three months’ worth of bills saved so that these things don’t threaten your family’s financial security when you’re already overwhelmed.
    • Get a handle on your budget. Competing priorities mean your money needs to stretch further for everybody. Now’s the time to cut back on anything you can and understand how much you have coming in and going out every month.
    • Have the right insurance. With multiple people depending on you, disability and life insurance are crucial for those part of the sandwich generation. That’s on top of family health insurance, homeowners coverage, car insurance, and the other usual policies. 

    Understand Everybody’s Needs

    As intimidating as it may be, you’ve got to sit down and talk to your parents and kids. If you don’t, you won’t understand their plans and needs. This also gives you a chance to communicate boundaries and potential problems with the financial aspects.

    If your kids are teens, I recommend discussing their college plans. Find out what type of school they plan to attend, which program they’re interested in, how long it lasts, and what the total cost might look like. Consider what you’ve saved for them already. Be honest if their plans are likely unaffordable. You can look into alternatives and get creative with that later.

    For your aging parents, you need to understand what their situation looks like. Many have homes they might plan to downsize or sell along with retirement savings, which may or may not be anywhere near enough for their needs. Then, you’ve got to consider their income, like pensions, Social Security, part-time jobs they’re currently holding, and so on. And it’s also important to discuss their health to be realistic about caregiving needs and costs.

    Keep Saving for Your Own Retirement

    This advice can seem unrealistic for many in the sandwich generation who don’t see room in their budget to keep saving for their own future. In fact, almost 60% of Americans in this group have either cut back or quit saving for retirement due to their financial support obligations.

    But this could put you in a dangerous situation that’s difficult to recover from. For many people, mid-life is when they’re making the most money and need to save more aggressively to avoid falling short at retirement. If you don’t save enough, you might struggle to cover decades of your life with a small Social Security check and limited savings. Or you might have to keep working.

    Fidelity says the sandwich generation should still contribute at least 15% of their pre-tax income. It also suggests this may be a first priority when making plans. Maybe that high savings rate won’t be practical in the most expensive years. But I recommend still saving as much as you can in tax-advantaged accounts and getting your full employer match, which further helps. 

    If you haven’t recently checked how much you’ll need for retirement, I recommend doing so. Consider that number and your savings rate as you figure out funding your kids’ education and managing your aging parents’ care.

    Get Creative With Funding Your Kids’ Education

    According to the Education Data Initiative, a student’s college costs on average total over $38,000 per year. That’s around $152,000 if they go for four years. However, it also depends on the type of school, program, living arrangement, supplies and books, and other details.

    Those can be scary numbers if you’re planning to foot your kids’ full education bills. But most parents aren’t paying all that since kids may qualify for grants and scholarships, work part-time jobs, get credit for classes they took in college, or test out of certain classes. Plus, if your child chooses a school nearby, they might settle with living at home, cutting out room and board.

    When figuring out funding, Vanguard suggests putting aside 3% of your family’s income every year for each kid. Whether that’s enough depends on how long you have to save and what your kid’s plans are. I recommend talking to your kid about potentially splitting costs if necessary while you also put money in a 529 plan or other college savings account. Alternative arrangements, like having them go to community college first, can also help reduce the burden.

    When college does arrive, have them fill out the FAFSA to see about grants and loans, apply to financial aid specific to their school, look into part-time jobs, and find other sources for help. Be careful about student loans, though. Make sure your kids know that they’re potentially stuck with monthly payments for decades. Cutting costs to minimize borrowing will be a major help.

    Handle Caregiving With Sustainability in Mind

    Having helped take care of my grandparents with dementia, I found caregiving extremely stressful even without having kids of my own. And for those in the sandwich generation, it gets much more complicated financially and can become unsustainable without a realistic plan.

    Ideally, while your parents are still in good health, you need to figure out an arrangement that works for everybody and leaves room for flexibility. Your reasonably healthy parents may still be able to live independently or with a relative. However, there may come a time when they need around-the-clock in-home care or be moved to a facility. That was the case for my grandparents.

    Here’s what I recommend to navigate caregiving while protecting your finances and still being able to take care of yourself and your kids:

    • Be realistic about aging-in-place plans. I’ve talked to several people whose parents were set on staying in their homes forever. But this wasn’t realistic once their health declined further since their homes didn’t have the right modifications or they couldn’t take care of everything anymore. And in some cases, they had conditions that made being alone unsafe. That left their family members struggling to figure out how to work and take care of their kids while constantly going over to take care of the person.
    • Know your limits. You might plan to move your aging parents into your home to save on professional care costs and keep them safe. But they may still need your support to cover expenses Medicare doesn’t. And again, at some point they might need more care than you can offer. Although it can be hard, you have to know your limits and be honest with your parents about what you can handle. I mean both financially and physically. Don’t be afraid to ask other family members if they can help out, too.
    • Discuss long-term care insurance. Even though a majority of us will need long-term care at some point, just 3% have LTC insurance, according to LIMRA. This coverage isn’t perfect since it can still leave your parents with major out-of-pocket costs. But I’ve found it’s still worth looking into, especially if they’re 50 to 65 years old. It can get too expensive after that age. What’s nice is the coverage is flexible whether your parents are set on aging in place or living at a facility.
    • Don’t overlook government assistance. If your aging parents have low incomes or not much in assets, they might qualify for help with long-term care costs at home or in a facility, medical bills, and other basic needs. Plus, there are even some programs that pay adult children who take care of their aging parents. I was surprised by some of these when I checked with my state about options for my grandparents. Just be prepared for a long and sometimes frustrating application process and strict rules.
    • Get the legal stuff figured out. As a caregiver, you can run into issues if your parents haven’t set up a will and power of attorney. You may find yourself in charge of making decisions about their health and assets. Without these documents filled out correctly, that can create headaches, as my family experienced. Trusts are another thing that can help protect your parents’ assets. I recommend going with your parents to an elder law attorney who can help navigate all the complex legal aspects.

    Find Balance for Your Family

    It’s not always clear exactly how to balance all your family’s priorities with your limited money and time. Many in the sandwich generation risk not saving enough for retirement, living paycheck to paycheck, building up debt, and falling behind in their careers. 

    You might make things work with trial and error. But I still recommend talking to a financial advisor who specializes in multigenerational wealth planning. They’ll be able to create a plan that lets you care for your parents and kids and doesn’t sacrifice your own future. This is also a good idea for more complex topics like estate planning and taxes.

    FAQs

    Should I prioritize saving for my kids’ college or retirement?

    Many financial experts recommend focusing on retirement first since your financial security is at stake. It’s usually the bigger expense as well. Once you’re saving at least the minimum for yourself, you could put some remaining money toward your kids’ college. Doing them both at the same time is possible and ideal if you can manage it. 

    How can the sandwich generation manage costs for younger kids?

    Since childcare is expensive, get creative about your options. Maybe a family member will help out, your job helps subsidize care, you can find an affordable after-school program, or you qualify for government daycare help. Some companies also offer special savings accounts for childcare costs, so ask.

    What if I can’t afford to take care of my aging parents?

    Government programs often offer help for the many people in this situation. Medicaid may be an option if your parents have limited income and resources. The local agency on aging might be able to connect you with low-cost care options or help you apply for assistance for your parents. 

    Our articles provide information purely for educational purposes and do not constitute financial, tax or investment advice.  You should always consult with professionals like licensed financial advisors or accountants before making any decisions.  We aim to provide up-to-date and accurate information, but we make no guarantees regarding the accuracy or completeness of any content.  All our examples are provided for illustrative purposes and may not reflect your personal results. We are not liable for any losses or damages arising from your reliance on the information provided.

    Sources:

    Ashley Donohoe is a personal finance educator with over 15 years of writing and editing experience. Whether she’s covering complicated tax laws or investment strategies, Ashley is skilled at breaking down complex topics with practical examples. Ashley holds multiple financial education certifications, including the Certified Financial Literacy Professional℠ (CFLP®) and Certified Financial Education Instructor (CFEI®) from the National Financial Educators Council. She also earned the Financial Planning & Wealth Management Professional℠ (FPWMP®) credential She’s an IRS Annual Filing Season Participant and holds the Uniform Tax Certification. Her work has appeared on major websites, such as The Independent, CNN Underscored, MarketWatch, FinanceBuzz, Car and Driver, GoBankingRates, and Money.com. Ashley’s holds a B.S. in Multidisciplinary Studies and a B.S. in Accounting and Data analysis from Liberty University, and an M.B.A. from Western Governors University.

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