The Sandwich Generation: Tips for Managing Finances and Reducing Stress

The term “sandwich generation” refers to a generation of adults who are caring for their aging parents while also supporting their own children. If you are “sandwiched” then you already know the unique challenges of balancing caregiving responsibilities for both younger and older family members.

If you fall in this category, you’re not alone. In the U.S., almost a quarter (23%) of adults — and more than half (54%) of adults in their 40s — are now part of the sandwich generation.¹ Although mainly identified as having a parent aged 65 or older and raising at least one child younger than 18, the characteristics of the sandwich generation are changing and expanding as life expectancy increases and more parents are financially supporting their adult children².

These revealing statistics shed light on the profound challenges that individuals like you are confronting:³

• The average sandwiched adult says they are spending 28 hours per week caring for kids plus 22 hours caring for senior family members.
• Almost half (47%) of sandwiched adults say that they couldn’t pay for basic needs at some point in the past year because of the cost of caregiving.
• 40% of sandwiched adults say they made a regretful financial decision as a result of mental strain from caregiving.

Since its inception in 1981, when it was coined in an article in ‘The Gerontologist,’ the sandwich generation has seen the development of many resources to aid in managing the dual responsibilities they face. From time and money management tools to emotional support systems, assistance is readily accessible. Empowering individuals to take charge of their lives helps ensure that the demands of their situation do not exhaust their health and financial well-being entirely.

Financial tips

Amidst the pressures of being part of the sandwich generation, you could significantly relieve stress by adopting proactive financial strategies — in addition to a financial plan that addresses short and long-term spending and savings. Below are practical financial tips to help empower you in effectively managing your dual caregiving responsibilities.

1. Manage spending and saving

• Protect your own financial future. While supporting others, ensure you have adequate life insurance and disability coverage. Protecting your income and assets can help safeguard your ability to support your family in the long term.
• Utilize tax breaks. Look into tax deductions or credits available for caregiving expenses. Examples include the Child Tax Credit and the Dependent Care Credit. If your parents are on Medicare and you are paying their expenses, such as medical, you may be able to claim them as dependents.
• Understand health care. Get familiar with your parents’ health care needs and insurance options. Explore long-term care insurance or other solutions for potential future health care expenses. Prepare for making decisions about palliative or hospice care. Review your own health insurance coverage to ensure it meets your family’s needs and consider contributing to a health savings account (HSA) for your own future health care expenses.
• Know your parents’ finances. Find out if your parent has social security, pension fund, or retirement account income. Gain access, if applicable, to account information, safe-deposit boxes, mortgage and auto details, and insurance policies. Explore being a “trusted contact” on accounts or financial power of attorney in their estate plan. Look out for scammers who take advantage of the elderly.
• Optimize 529 plans. Contribute tax-free to a 529 savings plan for your children’s college or K-12 private school tuition. Consider front-loading, also known as superfunding, the plan with a contribution that takes advantage of up to 5-years’ worth of gift tax annual exclusions in one year.

2. Get help from specialists

• Seek professional advice. If you haven’t already, consult with a financial advisor who can help you create a customized financial plan that balances current needs with long-term goals. Work with a tax planner or estate attorney who understands complex laws and IRS rules. Talk to insurance specialists who can provide guidance on optimal solutions, including life insurance and long-term care insurance. Periodically review your financial and estate plans and adjust when needed.
• Take advantage of caregiver support programs. Explore caregiver support programs and resources in your community through government or nonprofit organizations. These programs may offer financial assistance, respite care, transportation, or counseling. Mercer Advisors offers eligible clients access to Wellthy, which gives caregivers personalized support for various needs.
• Conserve your time. Find ways to automate routine tasks. Hire companies for help managing your responsibilities or your family member’s. This could save you time in areas such as bill payment management, grocery shopping, college student moves, and dry-cleaning pickup.
• Consider outside care. Research options for in-home care or assisted living arrangements when it’s appropriate to your situation. Have discussions with your family about the right caregiving approach for everyone involved. Keep in mind that individuals with Alzheimer’s disease live an average of three to 11 years after being diagnosed, but some live much longer.⁴

3. Practice self-care and set expectations

• Keep open communication. Discuss financial matters openly with both your children and parents. This includes explaining financial limitations and setting realistic expectations. Encourage transparency and mutual support within the family.
• Seek work-life balance. Balancing caregiving, work, and personal life is crucial for mental well-being. Explore flexible work arrangements if possible, such as telecommuting or flexible hours.
• Encourage financial independence. Teach your children about monetary responsibility early on. Encourage them to pursue scholarships, part-time jobs, or other ways to contribute to their own expenses.
• Take care of yourself. Don’t overlook your own well-being amidst caregiving and financial responsibilities. Allocate time for self-care activities that help reduce stress.

At Mercer Advisors, we have many clients who are part of the sandwich generation. We help guide them through this challenging time with financial planning, investment management, tax strategies, estate planning, trustee services, and insurance solutions. It’s our role to help relieve your financial worries and burdens, as well as direct you to the resources we know are useful from our nearly 40 years of experience advising clients. If you want to have a financial plan that can help with alleviating your stress and keeping you financially secure, let’s talk.

1.“More than half of Americans in their 40s are ‘sandwiched’ between an aging parent and their own children,” World Economic Forum, Apr. 14, 2022.

2.“The sandwich generation is changing. The stress remains,” The Washington Post, March 22, 2023.

3.“Cost of caregiving burdens nearly half of Sandwich Generation,” New York Life, Nov. 1, 2023.

4.“Alzheimer’s stages: How the disease progresses,” Mayo Clinic, June 7, 2023.