Skip to Content

Getting to know the sandwich generation: Part three

The sandwich generation are those pressed between the complex financial demands of both their children and their aging parents. To help understand and inform on the unique challenges of this demographic, we’ve created a three-part series. Part three is a look at specific strategies that can help these individuals set and achieve financial goals.






How can the sandwich generation help their financial situations?

With an older relative and adult child in the home, household expenses can rise easily between increased medical costs and large contributions (like college tuition). In addition, funding emergency savings and other accounts can place further strain on resources. While adults in the sandwich generation may experience challenges in maintaining financial health, there are strategies they can use to mitigate costs and improve the overall household situation. Some tips to consider include:

Communication is key

Though it may be a difficult subject to broach, families need to be willing to sit down together to have open and honest conversations.

Speaking with aging parents

In a Senior Helpers survey, 67 percent of Gen Xers and baby boomers would be comfortable talking to their parents about aging and long-term options. Who would pay their bills if something were to happen to them? How do they want to handle needs related to physical care? Discuss what to do when the time comes that aging parents need help with daily activities, and whether that would require professional support, either at home or in an assisted living facility. Be transparent about how much extra help would cost, and how much all parties can contribute. Talk about exploring options for care, and who will be responsible for investigating what. If aging parents are moving in, set clear expectations.

Speaking with adult children

Those in the sandwich generation should also take time to talk to adult children who may be living at home or requiring financial support. If your children are still in school, be honest about how college will be paid for. It’s perfectly acceptable to contribute what you can to your child’s education but also expect them to earn scholarships, work and take out student loans – especially because you also need to continue saving for retirement. If your children are young adults and you’re still helping out with expenses, establish a timeline of when the extra support will end. .

Having these discussions up-front will help reduce the emotions involved when it comes time to make decisions about long-term care and household management.

Use financial tools and accounts to their best advantage

Use a health savings account

Given the costs of caregiving, sandwich generation adults may want to investigate a health savings account (HSA). An HSA represents a valuable opportunity to offset the high costs of care. By contributing pretax dollars to an account, consumers can build up a nest egg to put toward qualified health care costs or use when they reach retirement.

Consider home equity loans or refinancing

Leveraging existing assets can be a solid strategy, one that may prove useful for households dealing with increased family expenses. Using the equity in a home can provide access to cash flow to help cover immediate costs.

Action items for those in the sandwich generation

Manage credit situations

The strain some in the sandwich generation may feel to meet expenses could drive them to take on more debt than they can handle. Though American household finances have largely recovered from the Great Recession of 2008, they could be approaching another precipice that requires caution.

Monitoring credit is among the most important steps to take, especially those in the sandwich generation. Watching credit scores and overall balances between installment and revolving accounts can help promote better financial maintenance for the long-term.

Prioritize retirement planning

Many individuals experiencing the squeeze between generational obligations neglect retirement planning entirely or do not save enough for retirement. Even though it becomes harder for the sandwich generation to save, those in need should consider vehicles like a Roth individual retirement account (IRA) or a 401(k) and contribute at consistent levels.

Speak with a financial advisor

Sometimes, households try to go at it alone, as they view such caregiving as more of a responsibility. However, speaking with a knowledgeable tax or financial advisor can have advantages, both for the experience and the objective perspective. It’s not just the monetary considerations of caregiving that can stress household earnings and savings. Having to take unpaid leave or cut back on working hours to devote more time to older relatives compounds an already complex financial situation.

The sandwich generation faces financial challenges between personal goals and the needs of family members . Explore strategies for saving and improving financial well-being to ensure you have the capacity to make payments while also providing support.

UMB personal banking solutions offer convenience and simplicity to meet all of your past, present and future financial needs. From home loans to auto financing and everything in between, see how UMB personal banking can work with you to find the right products for your life and lifestyle.graphic line break

Based on this piece, we think you might also be interested in reading the following blog posts:

Find a cause you care about and make it your passion

Life is why: Heart-led event raises over $1 million

Three lessons learned in Washington D.C.

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.

363 / 372

Leave a Reply

Required fields are marked

Currently you have JavaScript disabled. In order to post comments, please make sure JavaScript and Cookies are enabled, and reload the page. Click here for instructions on how to enable JavaScript in your browser.

When you click links marked with the “‡” symbol, you will leave UMB’s Web site and go to Web sites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other Web sites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.