6 Sandwich Generation Financial Planning Tips

This blog was origanally published January 2020, and updated March 2026 to reflect current information. 

Ongoing changes to the structure of the typical American family unit have created a new designation known as the “sandwich generation.

”The sandwich generation is defined as those Americans who are simultaneously responsible for their own children and their aging parents. Across the country, these middle-aged adults are finding themselves increasingly compelled to manage a multi-generational extended family, effectively “sandwiched” between their children and elderly parents.

These obligations may be multifaceted as the needs of each group vary widely. Essential parental duties include physical, financial and emotional support for their offspring. Aging parents may be in poor health, unable to perform basic tasks or require financial support as well. The common denominator in these situations is the need for financial assistance.

What is Causing the Sandwich Generation’s Financial Challenges?

We can pinpoint a number of developments that have created the sandwich generation. 

1. Longer life expectancies are extending financial responsibility

   Over the past several decades, life expectancy in the U.S. has steadily increased, with Americans now living into their late 70s on average. At the same time, the population is aging, with a growing percentage of individuals entering retirement years. 

2. Delayed parenthood is overlapping generations financially

   Many Americans are having children later in life, which can shift the timing of financial responsibilities. According to CDC data cited by CBS News, the average age of first-time mothers has increased significantly over the past several decades. As a result, more individuals may still be supporting children at the same time their parents begin to need additional care, increasing the likelihood of overlapping financial obligations across generations.
   
   

3. More adult children are returning home for financial support

   Another factor to consider is the growing number of adult children living with their parents. According to Pew Research Center data, roughly 18 percent of U.S. adults ages 25 to 34 live in a parent’s home. This arrangement, sometimes referred to as the “boomerang generation,” is often driven by financial pressures such as housing costs, student debt, or early career income constraints, extending the period of financial interdependence between generations.

4. Changing family structures are increasing caregiving demands

   Another outgrowth of these arrangements is that many middle-aged adults may be putting off their own retirement to fully address these issues. Many are at a time in their lives when they should be at peak earning potential. So, there may be competing priorities: expending finite resources on providing financial assistance to their close relatives versus saving for their own retirement.

    

Non-Financial Solutions for Those Caught in the Middle

 Fortunately, there are a number of ways that people can meet these challenges head-on.

1. Take advantage of flexible work arrangements.

   Many employers are aware of these sandwich generation challenges and have taken steps to provide flexible hours to their workforce, especially when senior care is involved. They understand the hidden costs associated with lost productivity. 
   
   

2. Leverage flexible spending accounts when possible. 

   Additional benefits may also be available for flexible spending accounts for dependent care, whether it is for young children or care for homebound seniors.
   
   

3. Learn about geriatric care management providers. 

   In instances where family caregivers are facing challenges with aging parents who have ongoing health issues, there are organizations whose sole purpose is to provide geriatric care management. In addition to health matters, they focus on concerns like housing, legal issues and the availability of government programs.

6 Sandwich Generation Financial Tips

Here are some sandwich generation financial planning tips from our experience talking with multiple families “in the middle.”

1. Honestly assess your ability to impact the financial situation before jumping in. 

   The first determination that must be made is an assessment of the resources available. Can you actually afford to make a difference? If so, will it be done by a reduction in your current discretionary spending? Either way, it is important to establish a set of priorities that keep you on track towards your retirement goals. Helping grown children or your parents pay for their current expenses while postponing your own retirement savings is a pitfall that needs to be avoided.
   
   

2. Ensure that adult children living with you contribute financially until they can be economically independent. 

   Even if it is difficult, it may be beneficial to put some expectations in writing. Address matters such as paying rent or another means of monetary assistance. Clear ground rules will benefit all parties involved in the long run.
   
   

3. Continue to make contributions to your retirement accounts. 

   To meet your goals you need to continue to ensure that you take advantage of the maximum employer match possible.
   
   

4. Don’t derail your savings for both your long- and short-term goals. 

   Continue to make your contributions as planned.
   
   

5. Review your financial plan. 

   Since you developed your original retirement savings plan with your advisor, many things may have changed. Maybe you never expected your children to be back under your roof. This is a life event that merits looking at your financial plan again.
   
   

6. Make an appointment with a Registered Investment Adviser (RIA), like Carnegie, for assistance. 

   An RIA can help you determine what the specific financial responsibilities will be for all family members. Your financial plan should be a document that is periodically reviewed and updated. It is always a work in progress. Ensure that your RIA is well-versed in elder care planning. You may need help in areas like legal documentation, living arrangements and insurance matters. Power of attorney and their wishes regarding life-prolonging care should also be considered. 

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Free Resource: Before a crisis forces you to scramble, download the Beyond the Will Checklist. It helps ensure important financial and estate details are documented so nothing falls through the cracks.

Surviving and Thriving in the Sandwich Years

The most important facet of financial planning for the sandwich generation is to continue saving for your own retirement in spite of headwinds. Most of all, keep the communication lines open between you, your children and your parents.

For informational purposes only. The information is not intended to provide specific advice or recommendations, and the information has been obtained from sources believed to be reliable.

Carnegie Investment Counsel (“Carnegie”) is a registered investment adviser with the Securities and Exchange Commission. Registration as an investment adviser does not imply a certain level of skill or training. For a more detailed discussion about Carnegie’s investment advisory services and fees, please view our Form ADV and Form CRS by visiting: https://adviserinfo.sec.gov/firm/summary/150488.

You may also visit our website at: https://www.carnegieinvest.com.