The ‘Sandwich Generation’ has a retirement problem - but these experts can help

The so-called “sandwich generation” has a lot on its plate. Many of these millennials and Gen Xers often have to care for both their aging parents and their children, while also trying to take care of themselves.

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But this can come at a price. A new Allianz survey found that an eye-popping 75% say “it is hard for them to juggle their financial needs and goals because they are caring for their children and parents.” Meanwhile, 59% say they “reduced or stopped contributing to their retirement savings account due to having to financially support both their children and parents.”

Underscoring the toll the dual caregiving takes on these Americans, the survey also found that 76% say providing care for everyone “is almost like a full-time job.”

Bobbi Rebell, CFP, consumer finance expert at CardRates.com, said that while the sandwich generation’s challenges are nothing new, the degree to which these are financially crippling American families is becoming increasingly alarming.

“Dual caregiving is not only exhausting for the caregivers, it is expensive. It is not surprising that saving for their own retirement has unfortunately taken a backseat to the more urgent short-term needs of their loved ones,” she said.

How it’s impacting retirement planning

In addition to neglecting retirement savings, this dual caregiving can affect other retirement aspects.

For instance, a recent Athene survey found that 34% of Americans in the sandwich generation plan on delaying retirement, while 9% are not planning to retire at all.

And a whopping 22% say they are using their retirement funds to support their family.

Tom Buckingham, chief growth officer at Nassau Financial Group, said that this double pressure is cutting into peak earning years and delaying retirement, without a clear plan to recover lost income and savings.

“This long-term impact isn’t just financial. It’s emotional. And it’s redefining what retirement can look like,” he said.

In addition, this is not only an issue for those in the sandwich generation, but also for those in the ‘open-faced’ sandwich generation, who are without kids but caring for their parents, said Jay Zigmont, PhD, CFP, founder of Childfree Trust.

As Zigmont noted, your parents’ financial planning, or lack thereof, can have a greater impact on your finances than your own planning.

“This is such a significant issue that we have now incorporated a step into our financial planning process that we call ‘plan for parents.’ When we delve into our clients’ parents’ financials, we often find they are either poorer or richer than we initially thought. Income and net worth disparities loom large among older generations,” he said.

Zigmont (pictured at left) added that while you may want to support your parents, there is a limit to what you can do. For instance, he said he worked with a couple who wanted to pay for their long-term care.

“Between them, they had three living parents. We calculated that it would be about $750k to cover them. With that large bill, it was quickly apparent that while in their heart they wanted to support them, it was impossible,” Zigmont said.

What can they do to be better prepared for retirement?

Austin Kilgore, consumer finance expert and analyst with the Achieve Center for Consumer Insights, said that first, it’s essential to realize that you really can’t take care of others very well if you are neglecting yourself.

He said to that end, ensure you have a solid budget, which should include an expense for retirement savings.

“Set aside a portion of every check/all income (ideally, at least 10%, more if possible) and put it in an appropriate retirement savings vehicle. If you can do so with auto deposits or transfers, that would be even better. And if you work for a company that offers a matching program, take advantage of it as much as you can; it’s free money to you,” he said.

He added that often, the budget will show you that it’s time to make changes: maybe your parents (or you) need to move to a less expensive place, or maybe hiring part-time care, allowing you to spend more time at your job, is a smart move.

“There may be all kinds of creative solutions to allow a better financial balance, all of which require difficult conversations and decisions. The reality is that things won’t get better on their own; you need to face the facts,” he added.

Another element to consider is that several support programs are available for caregivers, and it’s advisable to seek out tax breaks, said Michael Santiago, chartered retirement planning counselor.

Additional tips include hiring a resourceful advisor who will help you balance caregiving needs with your own future, “because no one else is going to look out for your retirement,” said Adam Spiegelman, founder and wealth advisor at Spiegelman Wealth Management.

Spiegelman also recommends being “a little selfish.”

“Don’t sacrifice your retirement completely for your kids or parents. They may have other support options, but you only get one shot at securing your own future,” he said.

Finally, he urges to invest often and automate contributions as compounding works best when it’s consistent.
“It matters less what vehicle you choose — real estate, mutual funds, ETFs, or stocks — and more that you stick with a plan and let compounding do its work over decades,” he said.