Caring for Parents and Kids: 6 Money Strategies for the Sandwich Generation

Apr 7, 2023 3 min read

Many people are struggling with competing responsibilities; 54% of Americans in their 40s are members of the sandwich generation, meaning they have a parent over the age of 65 and are also raising at least one child younger than 18 or financially supporting an adult child. As their parents age, many members of the sandwich generation are taking on more responsibility in caring for their parents while also caring for their children.

Being a family caregiver to both an aging parent and dependent children can be difficult in many ways – it may be physically exhausting, mentally taxing and financially challenging. If you or someone you love is dealing with sandwich generation stress, here are some financial strategies to help. 

  1. Get to Know Your Parents’ Finances

There is a social taboo around talking about money, especially amongst older generations, but it’s impossible to care for aging parents without an understanding of where they are financially, what their plans are for the future and what support they have in place.

Discuss their retirement income sources and their expenses, including any debts, so you have an idea of their day-to-day ability to fund their needs. It’s also important to look ahead and get answers to some important questions to help plan for the future:

  • Will they likely need medical care or assisted living?
  • Do they have long-term insurance?
  • Where will they live if they can no longer live alone?

Finally, talk with them about their estate plan and ensure you have access to what you need now and in the future. Find out where important documents are housed and who their legal, insurance, accounting and financial professionals are. Compile information you may need in the future, such as bank account logins, healthcare directives and medication lists.

  1. Take Inventory of Your Family’s Needs

Once you’ve had conversations with your parents about their financial situation, it’s time to get a handle on everyone’s financial needs. Managing multiple households can get chaotic, so it’s important to take some time to sort out income sources and expenses for each family/household. Create budgets for both your family and your parent(s). It may also be helpful to separate expenses into essential spending (such as mortgage/rent, utilities, insurance, healthcare, childcare and food) and discretionary spending so you have a good understanding of your baseline needs. 

Creating budgets for your parent(s) and yourself may seem like a basic step, but you’ll be surprised at how much it helps to understand where money flows to each month and where cuts can be made if they are needed.

  1. Prioritize Your Retirement Plan

Caring for so many people may mean that the funds you have to invest in your future are not as much as you’d like. You may have to choose between two important goals: building your retirement savings and helping your child(ren) with college. As much as you want to give your children a leg-up in the world, remember that there are loan opportunities for college funding but not for retirement. Additionally, failing to care for your financial future can put your children in a bind down the road.

Here are some quick tips for saving for retirement while also caring for your family:

  • Have an idea of how much you need.
  • Max out any 401(k) match offered by your employer.
  • Ensure your portfolio is diversified and aligns with your risk tolerance.
  • Talk with a financial advisor about saving for multiple priorities.

If you decide that your retirement is overfunded, you can consider using your IRA for education expenses. However, you should always talk with a financial professional before you make significant moves like taking a distribution from your retirement account to pay for higher education.  

  1. Develop a Financial Plan with Your Children

Your children are part of your household and, depending on their age, should be included in certain financial conversations. For young children, talking about the household budget regularly may help them understand when you have to say no to a request.

Discuss with your older children how much you can contribute to college expenses and help them seek out additional sources, such as scholarships and financial aid. Whether they are college-bound or not, talking about getting a job and helping them build their own budget can put them on a path to success and remove some their activity expenses – like tickets to movies or events – from your budget.  

  1. Plan for Long-Term Care

Long-term care is an important part of any conversation focused on the future. Approximately 70% of Americans who turn 65 will need long-term care, but by 65 it may be too late to be approved for long-term care insurance.1 Find out if your parents have long-term care insurance – if they do, make sure you understand what is covered so you can have a plan in place before it’s needed. You should also talk about paying for nursing home care if the need arises so neither you nor your parents will be surprised by the price tag. 

As you work through long-term care conversations with your parents, consider when you and your spouse should purchase long-term care insurance to ensure your children aren’t financially strained by paying for your future health care. 

  1. Get Professional Help

Working with a financial professional can help you juggle the many competing priorities in your life. In addition to advice, a financial advisor can provide peace of mind about your financial future so you can focus more fully on your family. Connect with a Farm Bureau financial advisor in your area today.

1 Social Security. 2022. Monthly Statistical Snapshot.

Want to learn more?

Contact a local FBFS agent or advisor for answers personalized to you.