The Sandwich Generation: Balancing the Financial Needs of Multiple Generations
Caring for both children and aging parents brings unique financial challenges – and opportunities to plan wisely for the future.
At some point, many people find themselves a part of the Sandwich Generation – a phase that occurs midlife when individuals are balancing the needs of children and aging parents. This group often faces unique pressures – including financial – as responsibilities may be rapidly changing. However, proactive planning and practical steps can help make managing these circumstances easier.
Are You in the Sandwich Generation?
If you are living in the Sandwich Generation, you may be feeling the squeeze. On one hand, you may be near or at the height of your career, after years of dedicated employment. You care for your children, shuttling them to and from commitments, or help them as young adults, navigating a complex world. At the same time, your parents, who once supported you, are getting older and may experience difficulties, such as health concerns, new financial demands, or transitions to different living situations.
You may feel constrained for sufficient time to juggle these overlapping responsibilities. Work-life balance may be more difficult to achieve, contributing to emotional fatigue from task overload and the pressure of big decisions.
In particular, this phase of life may bring you more financial complexity: supporting both children and parents, while simultaneously planning your own financial future. Costs, both monetary and otherwise, need to be managed. This includes healthcare, education, and housing but may also include invisible costs such as maintaining one’s mental health and physical well-being. Coordinating various financial accounts – ensuring appropriate titling and keeping an accurate inventory of family assets – while simultaneously setting goals to fund upcoming expenses and preserve long-term wealth can be taxing on the Sandwich Generation. The good news is, there are actions that can make this stage easier.
Managing the Financial Complexities of the Sandwich Generation
Although the Sandwich Generation often faces new challenges, there are options to address the increased financial complexities. Estate Planning can help to manage risk, coordinate care, and protect multigenerational financial stability. Estate Planning is the process of preparing for what happens to your assets, responsibilities, and personal affairs after you die or become incapacitated. It should be revisited with each new generation and may include establishing a power of attorney (legal authority to act on someone’s behalf), a healthcare proxy (designated medical decision-maker), and a will (legal document directing inheritance). A trust may also be created to delegate the responsibility for managing and distributing assets according to specific instructions.
Pursuing Financial Planning can provide clarity about a family’s financial circumstances and how to navigate this period of life. This process may prioritize spending, allocate resources, and manage cash flow so that obligations do not derail savings and future plans. A liquid emergency fund can aid in covering unexpected expenses for aging parents (medical and housing) and for children (school and activities). Such a savings reserve may avoid needing to sell investment portfolios or other assets at suboptimal times.
When busy in the moment, it may be difficult to consider the future and your own financial goals. However, it is important not to let current needs overshadow your own preparation. In particular, it is necessary to continue planning for retirement and your own golden years. For example, individuals should take full advantage of employer retirement programs and avoid skipping or reducing contributions. These continued commitments can support future savings growth, even when your mind is wrapped up in the present.
Seeking Assistance
While it can feel overwhelming to be in the Sandwich Generation, working with financial professionals may make your life easier. They can help you understand your circumstances, analyze your options, and develop financial plans. They may also serve as trustees on trusts to aid in fulfilling the intentions of earlier generations.
Partnering with financial professionals can alleviate time pressure through services such as tax preparation, bill pay, and coordination of various financial matters. Time saved can free you up to do things you enjoy, like hobbies, exercise, and spending quality time with friends and loved ones.
The challenges experienced by the Sandwich Generation can apply to other life phases or circumstances too. For example, you may have a family member with complex needs or a demanding job that leaves little time to care for your own affairs. The impact is the same: balancing the competing needs and pulls on your time can leave you feeling overloaded.
Welch & Forbes works with many multigenerational and busy families, often partnering with outside professionals, such as estate attorneys, to help each generation get the support and resources it needs. We can help manage the complexities of your financial situation so you can reclaim the time to focus on what matters most to you. If you are interested in learning more about how Welch & Forbes may be able to assist your family, please contact us online or call our Client Development team at 617-557-9800.
Disclosure: This information is provided for educational purposes only and does not constitute investment, financial, tax, or legal advice. Consult your tax advisor or legal counsel for advice and information concerning your particular situation. Welch & Forbes LLC is an SEC-registered investment adviser. Registration does not imply a certain level of skill or training.