The “sandwich generation”—people still supporting adult kids or grandchildren while caring for their own aging parents—has grown in recent years.
Nearly 48 million Americans, or 19.2%, have provided care for someone 18 years or older in the past 12 months. That number has gone up by more than 8 million since 2015.
Though the “sandwich generation” typically refers to adults in their late 30s to mid-50s, more people nearing retirement are finding themselves in that group as their parents live longer and adult children live at home longer due to economic challenges. During the pandemic, millions of young adults have moved in with family members. A majority of young adults ages 18 to 29 in the U.S. now live with their parents—the first time this has occurred since the Great Depression.
As a result, many people transitioning into retirement are having to juggle not only their own financial planning needs, but also those of their parents and their children. James Alverson, Director of Wealth Planning Strategies at TIAA, describes what sandwich generation people nearing retirement should consider next.
Greater percentage of adults providing caregiver duties
Care for yourself first
Financial implications of caring for aging parents
Financial implications of caring for younger generations
Young adults living with parents reaches a record high
Setting some financial ground rules should be one of the first things parents do if they find themselves looking after adult children.
“There’s that balancing act between empowering the next generation versus enabling,” Alverson says.
Part of that is agreeing on an exit strategy.
“Make sure it’s not an indefinite stay by having a timeline in place for them to leave,” he says. “One idea is to ask for a written plan, including goals and deadlines, concerning how long they’ll stay or for getting a job.”
Consider having your offspring contribute—not just doing some household chores, but also financially, paying rent or contributing to the household budget to cover a share of the “services” they’re getting at your home, such as electricity, TV or food.
“One idea I heard from a client was they had a child living at home and they charged him rent,” Alverson says. “But what they really did is set that money aside and gave it to him, when he left home, for a down payment. It’s an easy way to teach them about saving, budgeting and being fiscally responsible.”
If grandchildren are moving in along with their parents, or if you’re asked to be a caregiver for grandchildren, be clear about what financial support you will provide and whether you will take the role of babysitter.
No matter what ground rules you set, be sure to keep your financial advisor apprised of your situation and how it’s changing your goals and your financial situation. It’s easy for caregivers to sacrifice their own desires in order to help family members, but your advisor may be able to help you find ways to protect your own retirement while still helping out.
If you can manage the financial challenges of multigenerational caregiving, having multiple generations under one roof can yield benefits.
“I have a friend who says he’s been able to spend a lot more time with his grandchild,” Alverson says. “We’re seeing multigenerational families together and reconnecting in positive ways.”