Life Changes

Six Priorities for the Sandwich Generation

It can be challenging to care for aging parents while also raising children. Here are key financial actions for the sandwich generation to consider.

by Michelle Crouch - June 17, 2019

The “Sandwich Generation”—adults caring for aging parents as well as children—faces several stressful challenges that come from trying to juggle everyone’s needs. One of those top stressors: finances, such as how to cover education and health care costs and still save enough for retirement. The demands often compete with one another—which is why setting clear priorities is so important.

Here, Will Larson, a Retirement Planning Strategist for Wells Fargo Advisors, offers tips for setting those priorities to help you deliver the support your loved ones need—without shortchanging yourself.

1. Take care of your future first. Saving enough for retirement should be your top priority, Larson says. “Just like the flight attendant on an airplane tells you to put on your oxygen mask before you assist the people around you, you have to take care of your needs before you help your parents and your kids,” Larson says.

2. Create or update your investment plan. Create an investment plan that will help you balance your financial goals with the needs of your children and parents. Review your budget, analyze your expenses, and set savings targets to help you prioritize planning for an upcoming expense, such as college costs or long-term care for your parent.

3. Review your insurance coverage. Protecting your income is always a good idea, but it’s even more important when you have two generations depending on you, Larson says. Make sure you have enough life insurance in case something happens to you to pay off your mortgage and other debt, and to help cover the future living expenses of your dependents. And don’t forget disability insurance: More than a quarter of today’s 20-year-olds will become disabled before they retire, according to the Council for Disability Awareness.

4. Check in on your parents financial health. Though it might seem awkward, talk to your parents about their wishes for the future and their financial health, Larson advises. What financial assets and expenses do they have? How do they plan to meet their financial obligations? Do they have a plan to cover the costs of long-term care? This conversation can help you determine how much financial support you will need to provide, Larson says.

Also, make sure your parents have done adequate estate planning, and ask for copies of their will or trust, durable power of attorney, healthcare power of attorney, and advance healthcare directive. Make sure your own estate-planning documents are complete and updated as well. For more, see “Your Estate-Planning Checklist: 10 Documents to Get Started.” 

5. Consider reducing financial support for grown children. Many parents still help their grown children with their finances—sometimes even to their detriment. “Many young Baby Boomers are still paying their kids’ expenses: cell phone bill or car insurance,” Larson says. “They’re sacrificing their own financial security to pay for their children to have luxuries they didn’t have.” If this is the case for you, talk with your child about the steps they can take to start becoming more financially independent.

6. Look for ways to help reduce your taxes. In some cases, you may be able to claim your aging parents as dependents. Also check with a tax advisor to see if their medical expenses qualify as a tax deduction. Another way that may benefit your financial bottom line is to set up a 529 Plan for your children’s education expenses.

Michelle Crouch writes about consumer finance, parenting, and more from her home in Charlotte, North Carolina. Her work has appeared in Reader's Digest, Parents magazine, and The New York Times.

Additional Resources

Are you a member of the sandwich generation? Avoid these common caregiver mistakes.

Find strategies for talking with elder parents about finances—as well as an Elder Financial Abuse Protection Guide—here.

Wells Fargo Advisors is not a tax or legal advisor.

All investing involves risk, including loss of principal. Please consider the investment objectives, risks, charges and expenses carefully before investing in a 529 savings plan. The official statement, which contains this and other information, can be obtained by calling your financial advisor. Read it carefully before you invest.