Nearly one in four Americans belong to the “Sandwich Generation,” a group of 60 million Americans who are defined by their responsibilities to family members. While members of this group may be in their peak earning years, they’re also balancing financial and caregiving demands for both their children and their parents — whether they label themselves as “sandwiched” or look at this phase as a natural evolution of their family responsibilities. Either way, they’ve got a lot on their plates. You can play an important role in helping them manage it all — including ensuring that they keep their own finances on track while attending to their loved ones.
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Understanding the Sandwich Generation
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Pew Research, 2022
Caring for children and aging parents, with all the financial and emotional strain that situation can bring, is daily life for many people. This situation is common among adults across demographic groups. People of different racial and ethnic backgrounds are equally likely to be part of the Sandwich Generation, as are men and women.
of U.S. adults are part of the Sandwich Generation, meaning they have an aging parent and are either raising at least one child younger than 18 or providing financial support to an adult child.
of people in their 40s are sandwiched.
of the Sandwich Generation supports their extended family financially.
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Athene Survey, 2023
Helping family members across multiple generations can be stressful financially. In fact, Sandwich Generation caregivers are twice as likely to report financial difficulty than peers who are only caring for a parent over 65 — 36% vs. 17%, respectively.
Journal of the American Geriatric Society, 2022
of those who care for multiple generations say they have made financial sacrifices.
of sandwiched adults report they are putting off retirement to offer financial support to aging extended family or adult children.
lost by individuals who care for both children and older relatives because they had to do things like reduce their working hours, increase their expenses, or leave a job entirely as a result of these responsibilities.
New York Times, 2020
Projected lifetime retirement healthcare costs for a 65-year-old couple
Range of average annual cost of a college education (including tuition and fees; room and board; and allowances for books and supplies, transportation, and other personal expenses)
Average annual cost of day care for a toddler
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5
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Care.com, 2022
College Board, 2022
Health View Services, 2022
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Conventional wisdom tells us that parents can breathe a sigh of relief when their children turn 18, having done their job. But the reality is far different for many parents who continue to have major responsibilities for their children well into adulthood. Many children either stay home or return as young adults.
Financial issues lead many adults to live in multigenerational households. Some of these issues include:
High student loan debt.
High housing costs.
Lower wages for those without a college degree; multigenerational living has tripled among this group.
25- to 34-year-olds live in a multigenerational household — and nearly 7 in 10 of that group live with one or both parents.
of the Sandwich Generation financially support their adult children even though 78% report their adult children has a source of income.
say helping support their young adult children limits their ability to save for retirement.
of parents say they currently provide financial support to their kids who are over age 18.
say they’re forced to cut back on their own living expenses as a result.
NCES, 2022
Of the 31%,
Then, of that 4 in 10,
Credit Karma, 2022
The challenges faced by members of the Sandwich Generation are real, but not the whole story. As you interact with these clients, don’t assume the experience is entirely negative. Interestingly, people who are sandwiched are more likely to say they’re very satisfied with their family life than those who aren’t in this situation.
of adults living in multigenerational homes say it is mostly or always rewarding.
With so many demands facing them, these clients may have trouble setting priorities. You can provide an invaluable outside perspective, as well as financial planning expertise.
Remind your clients that setting aside even small sums on a regular basis can help grow their overall savings, providing a safeguard against the unexpected and a nest egg for retirement. Make sure they’re contributing at least enough to take full advantage of any matching plan contributions from their employer. They should not leave money on the table. And talk with your clients about how an annuity could fit into their retirement income plan. Guaranteed payments in retirement have real value for many.
If an aging parent doesn’t have their own relationship with a financial professional, consider suggesting a transparent conversation with them and your client. The idea is to begin building both trust and a clear picture of the parent’s finances. For young adults, consider family conversations, potentially followed by a one-on-one meeting to discuss retirement planning, workplace benefits, and the importance of saving from an early age. Even if they are unable to make it on their own today without their parents’ assistance, you can help them move toward independence.
You may need to discuss the possibility that your clients’ parents will outlive their retirement savings, become cognitively impaired, or fall victim to a financial scam or elder abuse. While these are not easy topics to discuss, they are realities that affect many families. Clients may also want to have frank discussions with their adult children about whether they should be contributing to the household’s finances and, if so, how much. You can help them think through what’s realistic and understand what’s needed. You also can help clients access other resources, providing referrals to trusted experts in fields such as tax or estate planning, insurance, or geriatric care management. Consider contacting your local Agency on Aging for information on specialized providers and other resources in your area.
Guarantees provided by annuities are subject to the financial strength and claims paying ability of the issuing insurance company.
Helping Sandwich Generation clients navigate their unique challenges is imperative, as the senior demographic continues to grow. The number of people in the United States who are 65 and older is projected to jump to more than 80 million by 2040, up from 56 million in 2022. That said, the picture is likely to change in the years ahead, as Americans are having children later overall, and an increasing number of people are choosing not to have any children. Continue to stay informed about these demographic shifts and adapt your practice accordingly. The guidance you can provide is crucial to serving Sandwich Generation clients. Given the stresses they face, these clients are likely to be very receptive to practical advice and support, especially when it relieves financial pressures or improves the quality of life for their loved ones.
ACL, 2019
U.S. Census Bureau, 2022
