The Sandwich Generation: A Guide to Supporting Your Family

Rachel Rabinovich

By Rachel Rabinovich
Rachel is a CERTIFIED FINANCIAL PLANNER™ who believes that financial planning can be a positive and powerful tool for changing lives.
Posted on 11/12/2018

I've realized that I'm part of the sandwich generation, which includes a group of people who have both their parents and their children relying on them for emotional and/or financial support.

My parents are retired and I have a grown child who is, thankfully, self-sufficient. So while I am not providing financial or physical support to either, I do find myself, as a financial planner, providing emotional support and financial guidance to both my parents and my daughter.

Many of my peers and former clients find themselves helping out financially as well. It's become clear in our conversations that it's difficult to balance raising children and worrying about how to help parents at the same time. Trust me, I understand the instinct to take care of the people you love, but I often remind people that they can't forget about themselves.

If you anticipate that you are going to find yourself giving support to both your parents and your children, there are a few things to keep in mind so that you maintain your own financial well being as well.

Take care of yourself first.

This is often the hardest thing to consider. Think of the emergency protocol you hear at the beginning of a flight. We're told to put on our own oxygen masks first, before we help anyone else. You can't truly help anyone else if you're not strong enough yourself. And do you really want to put your children in the position of having to worry about you when you are aging? Here's how to get started:

  • Be clear about your goals. Think about what you want to accomplish financially, this year, over the next few years and over the long term. Along with plans such as renovating your bathroom and saving for your children's college education, don't forget retirement. As you think about planning for your whole family, start by articulating what is important to you. This will also give you a clear view of how much you can afford to help.

  • Take some time to track and understand your cash flow. How much money do you take home each month after taxes? Once you have answered that question, sort your expenses into three buckets: essentials, goals, and discretionary spending (fun money). First look at the essentials. Then consider your goals - what you are already saving for or making extra payments against? Lastly look at your discretionary spending like eating out and entertainment. This exercise isn't fun. I get it. The first time we tracked our spending, I was pretty overwhelmed but it turned out ok. Just knowing where we stood made financial planning a lot less scary because you know what you're working with.
  • Take an inventory of what you own and what you owe. Include all of your savings, retirement and other investment accounts. If you own your home, don't forget to add your best estimate of what your home is worth. Then take a look at what you owe, like credit card balances, car and student loans and mortgage. Like tracking your expenses, part of creating a plan to reach your goals is to understand where you currently stand.
  • Make sure you have enough cash set aside in an emergency fund. If you have a major, unexpected expense, or you lose your job, you're going to need to have a cushion. This will keep your budget on track and minimize your need to take on credit card debt. If you are thinking about juggling help for your parents and children on top of your own needs, consider keeping at least six months worth of expenses on hand.
  • Don't scrimp on saving for your own retirement. It's hard to think about long term goals when your short term needs are so pressing. Saving even a modest amount now can help secure your future. If your employer offers a plan, consider contributing at least enough to get your full employer match. Increase your contribution incrementally each year when you get a raise. Ultimately, aim for saving 15% to 20% of your income.
  • Put together your estate plan. It's not just for the wealthy! This includes life insurance, updating beneficiaries on your accounts, and creating a will to ensure your children will be taken care of. Depending on your family's financial situation, consider your need for life insurance (type of life insurance and amounts) should something happen to you. Make sure all of your beneficiary designations are up to date. At the very least, have a will drawn up which, among other things, is where you indicate guardianship for your children.

How much do you want to provide for your children?

Beyond their essential needs, think about how much money you want to contribute to everything from spending money when they're young to college to helping them make ends meet once they have grown. There's no right or wrong answer here, but it is something that's important to be clear about.

  • Decide how much you want to contribute to their education. If you have young children, you are probably already dealing with day care costs which can dominate your cash flow. Soon enough however, they will grow up and move out, and a major consideration as your children grow is how much you are willing and able to contribute to their education. If this is important to you, include it into your list of goals so you can plan for it.
  • Set expectations. Whether you will pay for all or none of college, or have a child who isn't considering college, start having discussions with your kids early on. It's important for them to understand what is expected of them so that you can plan together. How much financial support will you offer? As a bonus: Expecting kids to take on some financial responsibility helps to prepare them for the day when they are expected to be financially independent.
  • Plan for independence. Ultimately, we want our children to be self-sufficient, don't we? Think of this as a long term goal. Even if you expect to give your kids some financial assistance as adults, whether that is as simple as keeping them on your cell phone plan or helping them with major living expenses, work out a plan to have them become financially independent over a period of time. Over time we took our daughter off of our auto insurance and health insurance. Now all that's left is the cell phone. I think she's hoping we forget about that one.

Take care of your parents.

They took care of me, but are they ready to take care of themselves now that they have stopped working? It's a strange sensation for me to worry about my parents' financial well-being. I've met many young adults who are already anticipating that they will need to help their parents out when they retire. They may very well need help, but the first step is to understand where they stand and what their needs are. Sometimes all they need is someone to help them get organized and know what their available resources are.

  • Inventory resources. One of the most important things to do is to take an inventory of your parents' resources. Just like you would do with yourself, understand what they earn, what they own and what they owe. Bonus points if you can get a handle on their expenses! It took a long time for my parents to feel comfortable talking to me about this, even knowing what I do for a living. But once they shared what their resources are, I think it was a huge relief to them. No more secrets.
  • Understand their needs. Before you take action, sit down and have a talk with your parents to find out what they feel their needs are and what their goals are for the future. It may be that they will need help making ends meet or a place to live. You might find that they just need assistance in helping to navigate the new challenges and opportunities in life as a retiree.
  • Estate planning. Just as estate planning is important for you, it's really important for your parents as well. Many people have a standard will, but it's crucial, especially for aging parents, to have a plan in place for who will manage their money or make medical decisions for them if they can't speak for themselves, and how their assets will be managed after their passing. What your parents' exact needs are will vary based on the complexity of their financial situation. For a primer on estate planning, check out our online course series. An estate planning attorney can help you and your parents each determine what your needs are.

Being in the middle of this "sandwich" can be anxiety provoking. It helps to make sure that you have a plan for your own financial security first, assess what the needs and goals are, and then you can plan appropriately for helping your children as well as your parents.