How to survive in the ‘sandwich generation’

By Shelly Gigante
Shelly Gigante specializes in personal finance issues. Her work has appeared in a variety of publications and news websites.
Posted on Sep 5, 2018

A growing percentage of “sandwich generation” adults worry that they may not have the financial means to care for their aging parents, and they do not want to put their kids in the same position.

According to MassMutual’s 2018 State of the American Family survey, 18 percent of Americans with household incomes of $75,000 or more and at least one dependent under age 18 know that their parents are counting on them to become caregivers, but don’t see how they will be able to afford it. That is up from 10 percent in 2013.

The vast majority of respondents have also made it a financial priority to cover their own elder care expenses so the costs do not become their children’s problem. Fully 78 percent of MassMutual’s respondents indicated that it was important to them that their children are never burdened by taking care of them when they get older, up from 67 percent five years ago.

The cost of providing care to aging parents can be staggering, depending on the degree of support they require.

According to a joint report by the Urban Institute and the U.S. Department of Health & Human Services, the average American turning 65 today will incur bills of $138,000 in future long-term care services and support, roughly half of which will be covered out of pocket and the rest by public programs and private insurance. Unlike the costs associated with child care, long-term care expenses are often incurred over a shorter period of time of about four years, making it difficult to absorb into a household budget.1

It is important to note that the expense associated with long-term care does not include the additional costs of medical care during retirement. Fidelity Benefits Consulting estimates out-of-pocket costs for a 65-year-old couple retiring in 2018 with Medicare coverage to be $280,000.2

Research resources

The sandwich generation consists primarily of those in their 40s and 50s who financially support a child (or perhaps a grown child) and an elderly parent (or two), which is the ultimate act of mutuality.

Their numbers are many. Roughly 44 million Americans provide unpaid support to older adults with disabilities, according to the Family Caregiver Alliance. The group notes on its website that family caregivers are often ill-prepared for their role and many develop emotional, mental, and physical health problems as a result of the stress.(Learn more: The changing role of the caregiver )

In many cases, caregivers are forced to derail their careers to be more present for their parents, which affects their ability to save and secure their financial future.

The strain of caregiving can be partly alleviated by advanced planning, said Carol Abaya, an author and nationally recognized expert on aging issues.

Sandwich generation parents should start by researching public and private programs that provide senior services, such as day care and transportation, in some cases at a reduced cost, she said. The National Association of Area Agencies on Aging offers a search tool for finding such resources near you. Religious organizations and groups that focus on a specific illness, such as the Alzheimer’s Association, can also be a valuable resource.

Your parents may also qualify for public assistance, such as public housing, utility assistance, property tax help, and Call-A-Ride service. Learn more about such programs on MassMutual’s blog .

Talk to each other

While their parents are still relatively healthy, Abaya said sandwich generation adults should initiate dialogue so they can gauge their parents’ financial preparedness and discuss their vision for old age.

Do they have enough saved to cover their needs? Do they wish to age in place, move to a retirement facility, or move in with a family member? Is that family member willing and able to accommodate? Do the aging parents have long-term care coverage?

To the extent possible, said Abaya, all siblings should be engaged in the discussion about next steps.

“As a family, you need to create a plan,” she said in an interview. “If the aging parent hasn’t talked about money or their health issues and who should handle things when they no longer can, the adult child needs to sit them down and start that conversation. Say, ‘This is what we’re doing for ourselves. What do you want us to do for you when you can’t make decisions for yourself?’”

If the aging parent is not comfortable discussing specifics, at least find out if they’ve created basic estate planning documents, such as a will, a living will that spells out their wishes for end-of-life care, and a health care directive, which empowers a trusted individual to make medical decisions on their behalf if they become too ill or incapacitated. Estate planning attorneys say all adults should also have a signed Health Insurance Portability and Accountability Act (HIPAA) privacy release form, which gives health care providers permission to discuss a patient's condition with the individual named in the health care directive.

They also urge seniors to draft a financial power of attorney document that names an individual to handle their financial affairs if they are unable to do so on their own.

It may help to involve a neutral third party. If your parents would feel more comfortable discussing their finances with a financial advisor or estate planning attorney, you can help them find a professional they can trust, so everyone can rest assured that they’re covering all their bases.

(Learn more: Tips for talking to aging parents)

Create your team

Sandwich generation adults who are caring for their elderly parent(s) while raising kids of their own should not be afraid to solicit help, said Abaya.

For example, ask siblings to chip in to cover the cost of their parent's room and board. Or, ask friends and family to arrange a schedule to relieve you regularly so you can get to the store, go to a movie, or run an errand.

“Be sure to bring the siblings in so chores and responsibilities are split up,” said Abaya.

In some cases, siblings (especially those who are not geographically close to their parents) even pool their money to pay for a home health aide or long-term care coverage on their parents’ behalf.

Abaya said grandkids are another untapped resource in many homes, more than able to provide relief by reading to their grandparents, driving them to doctor’s appointments (if old enough), and making grocery store runs for essentials. Even asking them to take out the trash or help with laundry can give caregivers a much-needed break.

Tough choices

If you wish to spare your kids the same financial fate down the road, especially in an era in which pension plans are all but extinct, it may also be time for some tough budgeting choices.

Financial advisors generally insist you should save for your own retirement first and contribute to your kid’s college account only if there’s money to spare. Remember, your kids can get a loan or a scholarship, but there are no loans available to help you cover the bills in retirement.

To feather your nest egg adequately in the face of higher caregiving expenses, it may be necessary to reduce your standard of living, at least temporarily. Look for opportunities to save by cutting your cable bill, cooking more meals at home, and canceling your unused gym membership for starters.

(Calculator: How much should I save for retirement?)

For many middle-aged parents, the financial burden of caring for their elderly parents is compounded by the dependency of their adult children.

A Pew Research Center survey found 61 percent of U.S. parents with adult children had helped their child financially in the preceding 12 months.4

If your adult kids move back home after college, consider charging them rent. And, just say no if they ask for help with a down payment on a house or a new car if it negatively affects your retirement savings, secure in the knowledge that your own financial independence is the best gift you can give them. (Learn more: Supporting adult children )

Millions of families are feeling the financial squeeze of supporting their children and their aging parents at the same time. To safeguard their own financial security (and sanity), sandwich generation parents should research senior services programs, communicate with their parents, enlist friends and family, and set limits on their budget to ensure that their own financial security remains intact.

More from MassMutual…

Retirement: How to preserve it while helping your parents

Living in the ‘Club' sandwich generation

Need financial advice? Contact us

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Urban Institute and U.S. Department of Health & Human Services, “Long-Term Services and Supports for Older Americans: Risks and Financing Research Brief,” July 1, 2015.

Fidelity Benefits Consulting, “A Couple Retiring in 2018 Would Need an Estimated $280,000 to Cover Health Care Costs in Retirement, Fidelity Analysis Shows,” April, 19, 2018.

Family Caregiver Alliance , “Caregiver Health: A Population at Risk,” 2006.

Pew Research Center, “Social & Demographic Trends: Family Support in Graying Societies,” May 21, 2015.

The information provided is not written or intended as specific tax or legal advice. MassMutual and its subsidiaries, employees, and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel. Opinions expressed by those interviewed are their own, and do not necessarily represent the views of MassMutual.