The “sandwich generation”: Those Americans thrust into the precarious position of financially juggling young children and elderly parents. Lots of older Millennials and Gen-Xers are finding themselves in this bucket, with plenty more being thrown into the mix each year. Grappling with the daily responsibility tug-of-war can be a real emotional struggle. Figuring out how to prioritize the household finances is even more daunting, with the potential implications lasting for decades.

The American family evolution.

As the average American lifespan has steadily climbed, the simultaneous management of the needs of aging parents and dependent kids has become more commonplace. The “sandwich generation” segment of our society has actually been around for decades. Yet the percentage of today’s households dealing with these challenges is on the rise. The upward trend in the age that people are achieving life milestones while in pursuit of higher education and more sustainable careers has played a pivotal role. Couples are postponing having children for a variety of societal and economic reasons. This upward shift in new parent age means lots more families have young kids in the house right alongside their grandparents.

Tugging at the household purse strings.

The skyrocketing daily costs of aging are mindboggling. The biggest indicator of whether a “sandwich generation” household can successfully cope is how aging parents are financially positioned at retirement. If elderly parents require substantial support to cover age-related expenses above and beyond what they can afford on their own, adult children find themselves making up the difference. With young kids to pay for at the same time, family wallets can feel the squeeze quickly. Any available slack in the monthly household cashflow may be eaten up by medical bills, nursing care, and elder living expenses. What makes this situation even harder to navigate? Many aging parents need help paying their bills quite suddenly and unexpectedly, causing even more drastic negative financial consequences for “sandwich generationers”.

Making it work.

How are families handling this uptick in monthly household costs? Many “sandwich generationers” are opting to house their parents under their own roof, with multi-generational homes becoming much more mainstream. Careers are being put on hold. Full-time workers are transitioning to part-time employment to keep up with the day-to-day responsibilities at home. Unfortunately, less time in the workforce leads to a drop in household income, loss of access to full-time employment benefits, and a decrease in the capacity to adequately save for retirement. The ability to accumulate household savings for pursuits in the future is depressed as well.

Planning now for what lies ahead.

The ideal way to navigate any big change in a family’s financial situation is to plan for it well in advance. Here is a list of moves you can make if you are soon to be joining the “sandwich generation”:

• Talk to your parents about how they are financially positioned as they approach retirement age. What do their savings and debt loads look like? How about their monthly expenses? Do they live well within their means or are they already overstretched?

• Allocate funds in your own financial plan for your parents’ care if they will likely need support in the future.

• Build a joint financial plan with your parents. Account for all financial resources and responsibilities. Set an agreed upon strategy for maximizing the available funds. Keep an eye out for any potential weaknesses or shortfalls that could arise in the coming years.

• Seek out a mediator who can coordinate and facilitate the conversation between you and your parents. Discussions about money and expectations can often be uncomfortable. Having an independent party in the room can be a great way to ease any tension.

• Be realistic about what you are, and are not, able to handle. Every family situation is extremely unique. Seek out help and viable alternatives if the numbers simply are not adding up.

If we can be of any assistance while your family plans for what lies ahead in the coming years, do not hesitate to reach out.