5 Financial Tips for the Sandwich Generation
According to a survey conducted by the Pew Research Center, 23% of U.S. adults are now part of the “sandwich generation,” meaning they have both a child who is younger than 18 and a parent age 65 or older. Americans in their 40s are most likely to be in the sandwich generation, with 54% falling into this category.1
While caring for two generations requires a significant investment of time, energy and emotion, it also requires financial support. Most of those in the sandwich generation also support their loved ones’ financial needs. In fact, 21% of people in their 50s have provided financial support to both their children and their parents.2
If you find yourself in the sandwich generation, the emotional and financial challenges of providing for your loved ones can take a toll on your well-being. Supporting both generations can put a significant strain on finances, especially with the rising costs of healthcare and childcare. However, the following financial planning tips can help you manage this challenging stage of life.
#1 – Stabilize your finances.
Just as every flight attendant instructs you to, “Secure your own oxygen mask before assisting others,” so should you secure your own finances before attempting to support your loved ones. If you don’t already have one in place, start by developing a detailed household budget to guide your saving and spending decisions.
Make sure your budget accounts for your current expenses and your family’s immediate needs as well as the costs associated with caregiving. Consider what additional expenses you may face in the future, such as college expenses for your child(ren) and the cost of long-term care for your parent(s).
Once you have a budget in place, make sure you have at least three to six months’ worth of living expenses saved in a liquid account. This money can help cover any emergency or unexpected expenses that may arise.
#2 – Save for your own retirement first.
A common mistake made by those in the sandwich generation is failing to save enough for their own retirement. You only have one opportunity to retire, and it’s important to save enough assets to last throughout your retirement years. Don’t sacrifice your own future to care for others. Instead, make saving for retirement a budget priority.
If you have access to an employer-sponsored retirement plan, make an effort to contribute as much as possible each pay period. At a minimum, make sure you’re contributing enough to receive your full employer matching contribution. Each year, consider increasing your contributions by 1%-2%. You’re unlikely to even feel the impact of these small increases on your take-home pay, yet the added savings can make a big impact over time.
If you don’t have access to an employer-sponsored plan, or you’ve maxed out your contributions, consider saving in an IRA. In 2025, individuals can contribute up to $7,000 per year to a traditional or Roth IRA, with an additional $1,000 catch-up contribution permitted for those age 50 and older. You may contribute to a traditional IRA regardless of your income; however, your ability to deduct those contributions from your taxable income may be limited. To contribute to a Roth IRA in 2025, single filers with a modified adjusted gross income (MAGI) of less than $150,000 and married couples filing jointly with a MAGI of less than $236,000 can contribute the full amount to a Roth IRA.
#3 – Plan for college expenses.
If you plan to help pay for your child(ren)’s college education, it’s wise to start saving as early as possible. One of the most popular college savings vehicles is the 529 college savings plan. Contributions to 529 accounts grow tax-deferred, and withdrawals are tax-free as long as they’re used to pay for qualified education expenses, such as tuition, room and board, and fees. Many states also provide a tax deduction or credit for contributions to your state’s plan.
Additional college savings vehicles include Coverdell education savings accounts, pre-paid tuition plans and custodial accounts. Your wealth manager can help you establish a college savings strategy that makes sense for you and your family.
#4 – Consider long-term care insurance.
It’s estimated that 70% of those turning 65 will require long-term care in their lifetimes, and 48% will require paid long-term care for more than two years.3 In 2024, the national average cost of a private room in a nursing home was $10,646 per month, while the national average cost of a home health aide was $6,483 per month.4
These expenses can be difficult for anyone to handle, but it may be especially difficult to subsidize long-term care expenses for a parent when you’re also financially supporting children and trying to save for retirement. That’s why it may make sense for your aging loved one to purchase a long-term care insurance (LTCI) policy. Your wealth manager can help you determine if LTCI makes sense based on your parents’ specific needs and financial situation.
#5 – Consult with an estate planning attorney.
Another important consideration is whether both you and your parent(s) have the proper estate planning documents in place. Depending on your loved ones’ assets and goals, they may have trusts and wills to specify how assets will transfer upon their deaths. It’s important to regularly review and update these documents to help ensure they continue to meet your parents’ needs and wishes as their lives evolve over time.
As a primary caregiver, you’ll need to make sure your parents have power of attorney documents in place to cover both financial and healthcare decisions. These are separate documents that grant you permission to manage your parents’ affairs should they become incapacitated and unable to make decisions on their own. Without these legal documents, you’ll likely need to go to court to gain access to their accounts and/or make healthcare decisions on their behalf.
While you’re at it, take time to review your own estate plan and make sure you have the necessary strategies in place to protect yourself and your loved ones, should something unexpected happen to you.
Could you use help planning for the financial challenges you face as part of the sandwich generation? Creative Planning is here for you. As a nationally recognized wealth advisory firm, we deliver a team of credentialed, educated, experienced and action-oriented advisors, including Certified Financial Planner® practitioners, certified public accountants, insurance specialists, attorneys and other professionals dedicated to helping you achieve your goals. We work together to help ensure all aspects of your financial life are well cared for.
