Broadly speaking, the Sandwich Generation refers to anyone who has the dual responsibilities of caring for children and an aging relative (usually a parent). The term is used because the caregiver is found “sandwiched” in the middle.
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Balancing retirement planning with caretaking: Tips for the Sandwich Generation
It isn’t easy caring for young children and aging relatives at the same time. But that’s the challenge that millions of Americans are facing these days. In this article, we pass along some financial strategies and tips that can help make things easier for members of the “Sandwich Generation.”
The Sandwich Generation faces multiple challenges
If you’re a member of the Sandwich Generation, you know how difficult it can be to juggle the demands of raising children while caring for aging parents. According to a 2023 Wealth Watch Survey sponsored by New York Life, 95% of Sandwich Generation adults say that caregiving has impacted an area of their life with personal finances (47%), mental health/stress (44%), and their social life (44%) being the top areas impacted.*
The high cost of caretaking
Serving as a dual caregiver can take both an emotional and physical toll. This is especially true when you consider that members of the Sandwich Generation typically spend 20-30 hours per week taking care of their loved ones—and that 32% provide financial support to both their parents and children.1
Long-term care can be costly
Learn more about Long Term Care Insurance
Raising children can be costly
On the other end of the spectrum, the cost of raising children continues to rise. According to the Brookings Institute, families will spend an average of $310,605 to raise a child born in 2015, adjusting for inflation to 2024 levels. For parents of young adults, the financial demands often continue.3 With student loan debt and housing costs steadily increasing in 2024, many young adults rely on parental financial support well into their 20s or even 30s.
Saving for retirement is often scaled back
Between elder care and child-rearing responsibilities, many members of the Sandwich Generation find it nearly impossible to save or plan for retirement. According to an Associated Press poll, 23% of caregivers have reduced their retirement contributions due to caregiving expenses.4 What’s more, 56% of all Americans report that they would be willing to use their retirement savings to help care for a family member.5 While this might seem like a short-term fix, it creates long-term risks, such as delaying retirement or becoming financially dependent on your children in the future.
How to balance retirement planning and caretaking responsibilities
While the demands of caregiving can be a lot for one person to handle, the good news is there are steps you can take to lighten the financial load.
Use your money last
While it’s natural to want to provide for your family, it’s important to make sure you tap all available resources before dipping into your own. That way, your money has more time to grow and you don’t lose out on important wealth-building opportunities. When possible, you should always try to use government and employer resources first, your loved one’s resources second, and your resources third.
Tap into government resources
You don’t have to shoulder all caregiving costs alone. There are a variety of federal and state programs that offer financial assistance for caregivers and their loved ones:
Medicare and Medicaid: If your loved one qualifies for Medicare or Medicaid, these programs can lighten some of the financial burden of medical expenses. Medicaid provides coverage for extended periods of care, which private insurance often doesn’t.
Veteran Benefits: If the person you’re caring for is a veteran, they may be eligible for benefits like Aid and Attendance, which helps cover the cost of in-home care, assisted living, or skilled nursing facilities. Plus, they may have access to a host of medical benefits that could help reduce healthcare costs.
Area Agencies on Aging (AAA): Local aging agencies offer resources and can guide you to financial assistance programs in your area. This might include food delivery services, transportation support, or respite care.
Family Leave Policies: Some states have paid family leave programs that allow you to take time off work to provide care without losing income. Research whether your state offers this benefit or if your employer includes it in their offerings.
Leverage Employer Benefits
Many employers recognize the financial and emotional challenges of caregiving and have benefits designed to help. Make sure you’re taking advantage of everything available to you
Employee Assistance Programs (EAPs): EAPs often provide free or low-cost resources for caregivers, including financial counseling, support groups, and even referrals to elder care services.
Flexible Spending Accounts (FSAs): FSAs allow you to set aside pre-tax dollars to pay for qualified medical expenses. Depending on your employer’s plan, this might include home health aides, physical therapy, or medical equipment for the person you’re caring for.
Remote Work and Flexible Schedules: If you’re juggling caregiving with a full-time job, ask about options like telecommuting or flexible hours. This can help you avoid costly disruptions to your work schedule, reducing the risk of lost income or career setbacks.
Make your retirement plan a priority
Prioritizing your retirement is not selfish; it’s necessary. Contribute as much as possible to your 401(k) or other employer-sponsored retirement account—or at least enough to take full advantage of any matching dollars your employer may offer. That’s essentially free money that you can’t afford to lose.
Find free or low-cost support services
There are countless community resources available to help caregivers save money and find emotional support. Using these services can reduce out-of-pocket expenses significantly:
Nonprofits and Community Organizations: Look for local nonprofits offering free services for caregivers, such as respite care, transportation, or meal deliveries. Organizations like Meals on Wheels and the National Family Caregiver Support Program are great places to start.
Support Groups: Joining a caregiver support group can provide emotional tools and connect you with others who have useful cost-saving strategies to share.
Senior Centers: Many senior centers offer workshops, health clinics, and other programs that can reduce caregiving expenses.
Share the physical and financial load
Don’t try to shoulder everything alone. Invite siblings, or other relatives to help with caregiving duties. Even small contributions, like driving parents to appointments, can reduce your burden. And the same goes for finances. If you divide up the cost, you should be able to make the burden more manageable.
Consult a financial professional and other expert
As a member of the Sandwich Generation, you’re dealing with a lot of complex financial issues. The good news is you don’t have to tackle them alone. A financial professional can put together a long-term strategy that protects your financial future and helps generate the resources you need to look after your loved ones. You may also find it especially helpful to work with an elder attorney who can help you navigate state and federal eligibility requirements and help you access many of the resources mentioned in this article.
The sooner you start, the better
Caregiving is one of the most meaningful roles you can take on, but if you aren’t prepared, it can pose significant financial challenges. The sooner you have a comprehensive caregiving plan in place, the more secure your current lifestyle and retirement will be.
Balancing retirement planning and caretaking Q&A
Caregivers can use a variety of tax-advantaged^ solutions such as whole life insurance, annuities, and retirement accounts to help build a secure retirement. Caregivers may also want to look into long-term care insurance as a way to make things easier for their children in case they find themselves in a similar situation.
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^Neither New York Life Insurance Company, nor its agents, provides tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.
1Brad Brenner, PhD, “Squeezed in the Middle: Balancing Act of the Sandwich Generation,” Therapy Group of DC, September 13, 2024
https://therapygroupdc.com/therapist-dc-blog/squeezed-in-the-middle-balancing-act-of-the-sandwich-generation/.
2Genworth Investor Relations. Press Release, March 12, 2024
https://investor.genworth.com/news-events/press-releases/detail/972/genworth-releases-cost-of-care-survey-results-for-2023
3“It’s getting more expensive to raise children. And government isn’t doing much to help.” Brookings.net, August 30, 2022.
https://www.brookings.edu/articles/its-getting-more-expensive-to-raise-children-and-government-isnt-doing-much-to-help/
4“Long-Term Caregiving: The True Cost of Caring for Aging Adults,” Associated Press-NORC Center for Public Affairs Research
https://www.longtermcarepoll.org/long-term-caregiving-the-true-costs-of-caring-for-aging-adults/
5“The Nationwide Retirement Institute® 2024 Long-Term Care Survey,” April 2024
https://news.nationwide.com/download/5f0f634e-2227-410d-9216-ae5eda0b7b02/nfm-23936ao-.pdf
*ABOUT WEALTH WATCH
Wealth Watch is a recurring survey from New York Life that tracks Americans’ financial goals, progress toward those goals and feelings about their ability to secure their financial futures, identifying key themes and trends that are emerging about topics like retirement planning, the role of protection-oriented solutions and the importance of financial guidance.
SURVEY METHODOLOGY
This poll was conducted between August 31–September 10, 2023, among a sample of 1003 Sandwich Generation adults and include those providing care to an aging parent and child(ren). The interviews were conducted online. Results from the full survey have a margin of error of plus or minus 3 percentage points.