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How to make sure the sandwich generation doesn’t eat it financially

September 25, 2015

Amanda Bailey considers her family one of the more fortunate “sandwiches.”With two children away at college, Bailey’s 85-year-old father Fred came to live with her in their Katy, Texas, home after his wife died from Alzheimer’s. He remained for a year and a half, long enough for Bailey to piece together savings, his pension, Social Security benefits and other resources to place her father in an assisted living community.


It didn’t hurt that Bailey, 50, had some 10 years’ experience working in the long-term care field and had recently started Cypress Trio, an online resource for families looking for information about long-term care providers: “I don’t know if I would have done half the stuff I did if I hadn’t worked in the industry,” she said.


The term “sandwich generation” is unnervingly appropriate. It represents adults who are supporting children of their own while looking after aging parents at the same time. It’s also a situation fraught with financial uncertainty and a stress-riddled environment that few families plan for.


But you don't have to work in the long-term care field, like Bailey, to start thinking about the dynamics of a “sandwich” arrangement, before it occurs, to make certain that those in the middle don’t end playing the financial martyr.

A widespread reality

While lengthening life expectancy is certainly good news, it’s also become increasingly common for adults to care for aging parents in some capacity while raising children of their own. A recent Pew Research Center study found:

  • Nearly half (47 percent) of adults in their 40s and 50s have a parent 65 or older while either raising a young child or financially supporting a grown child (age 18 or older).

  • Roughly one in seven middle-aged adults (15 percent) is providing financial support to both an aging parent and a child.

The issue isn’t confined to simple economics, although helping out an aging relative can certainly strain finances. A 2015 study by Genworth Financial put the annual average cost of a semi-private nursing home room at a staggering $80,300.
“The risk of paying for nursing care can be financially devastating to a family,” said David Henderson, a Greenwood Village, Colorado, certified financial planner.

Add to that the uncertainty of whom to help out financially and to what degree.

“People tend to react emotionally,” said Steven Kaye, a Warren, New Jersey, certified financial planner. “They think of their parents and remember how they’re the ones who paid their way through college.”

The risks of acting on emotion are magnified by the fact that many families are forced to react to a sandwich generation situation rather than planning for it in advance.“It can be purely reactive,” said Kaye. “It’s something like, all of a sudden, ‘Mom has to come live with us.’”

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This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. Please consult with a professional specializing in these areas regarding the applicability of this information to your situation.

Andrew Wood, Dan Simon and Alison Slezak are Investment Advisor Representatives. Advisory services are offered through CoreCap Advisors, LLC., a Registered Investment Advisor. CoreCap Advisors, LLC and Daniel A. White & Associates, LLC are separate & unaffiliated entities. 

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