The Sandwiched Generation

by golbguru on November 22, 2007

A few days ago, CBS Evening News ran an article titled “Caregivers Rise to the Challenge” which featured some families that were struggling to keep up with taking care of their aged parents (in terms of time and money). Here is an excerpt from the article:

Winchell’s family may be America’s new norm. An estimated 34 million Americans care for loved ones age 50 and over. A just-released healthcare study of a thousand caregivers finds half of them are spending more than 10 percent of their income on it. One in three used some of their savings to cover costs. Just like the Winchells.

When asked if they had any savings put away for their own retirement, Stacy Winchell said, “No and I don’t foresee that at this point in time that there will be any retirement.”

…. But without her own financial cushion, it might be her own children who have to be there for her, when the time comes.

People who are struggling to maintain their own financial well being, in addition to looking after their parents and their kids, are what I call the “sandwiched generation”.

Notice the sort-of-treadmill effect in the above example? Stacy doesn’t have anything saved for her retirement - which effectively means that her children will probably have to spend their savings towards her post-retirement well being - which very likely means that they will probably have less for themselves in future. It’s an interesting cycle (played out all too well in most developing countries) - one which will not come to an end unless one of the generations takes the additional pains of providing for their parents as well as their kids.

A few months ago, Jonathan @ My Money Blog voiced concerns along these lines - which effectively summarized the classic dilemma that the sandwiched generation faces:

But what if they do run into issues, for whatever reason? I know that I’d step in to help for sure. For one, I know that my parents regularly give my grandparents money. I don’t know how much or how often, it could be just spending money, but I know they do send something. I guess this is what some people call the “sandwich” problem. Young families have their own retirement worries on one side, their kid’s education in the middle, and their parents’ needs on the other side.

Do you worry about your parents’ retirement plans? Should a child ask their parents about such details or get involved? How does one incorporate this into their own financial plan?

Check out the comments below Jonathan’s post to get a feel of how some people are addressing the issue.

I guess we would all ask these questions to ourselves at some point of time - whether our parents are in a good financial position or not. With what intensity you ponder over these question probably depends on your culture, temperament, and your personal relations with your parents, but most of you will think about this for sure.

I am probably among the fortunate young (in a relative sense) people who may not have to worry too much about the post-retirement financial concerns of their parents. My dad and mom voluntarily retired when they were 49 and 46 years old, respectively. They planned their finances very well (although we barely made “middle-class” in the kind of society we lived in) and are probably set for the rest of their lives.

Although, it’s reassuring to know that my parents are taking good care of their money, I am still keeping some part of my income earmarked for them - in case of unanticipated health care issues in future. Plus, we (me and my wife) are slowly acknowledging (and preparing for) the fact that, in future, our careers and/or lifestyle decisions may be affected by our willingness to be caregivers for our parents - if and when the need arises. This is, of course, in addition to working towards our own financial well being - so that our children won’t have to worry about our financial stability after we retire.

As for health issues, there isn’t much we can do right now - except to make sure that we maintain a reasonably healthy lifestyle and to that our health care costs are not our children’s burden. As for our children (when we have them), we are not yet sure how much financial help they would need - for now, saving for their education is our only concern. It all boils down to saying that when we save about 25% of our income, part of those savings are earmarked for kids and parents.

Another thought to take home from this discussion is to acknowledge that your financial and physical health not only affects you, but also a generation before you and a couple of generations after you. If you get into trouble (in terms of health or money), whether out of sheer obligation or out of willingness, people who care about you are generally bound to come to your aid (unless you have been a total ass all your life) - and although they may not admit it, it will cause them and their family some discomfort. As such, it is up to you to make sure that they don’t suffer because you didn’t plan your finances well when you had a chance, or because you never cared about your health. :)

Do you belong to the sandwiched generation? How are you dealing with it?

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{ 11 comments… read them below or add one }

1 Invest with Dax 11.25.07 at 11:22 am

I agree whole-heartedly. Individuals should get financial planning advice early on. I say in high school it should start. Perhaps call it “Life Skills” or something to the sort. Explain individuals responsibilities and consequences. It may even lead to more people going for higher education if they realize life is not all fun and games.

2 barry b. 11.25.07 at 4:10 pm

nice article,
yeah i belong to this generation. I’m 32 and my mother and father will certainly require some assistance in the near future. I’m broke and finally realized it!!! I’m working overtime, paying off all my debt as fast as I can. Trying to get into the black as soon as possible. I believe that the only way to really gain fiancial freedom is to stop using credit. And i’ve done exactly that.
best regards

3 Earl 11.27.07 at 1:15 am

The sandwich generations could also be immigrants who are paying for their parent’s sacrifice to leave their hometown and just to enter North America. I know my parents made some large sacrifices to move to Canada - and although they’ve had some share of success, I know that in the future as the firstborn - it falls in my responsibility to take care of my parents, my grandparents if they need help, my future children, my in-laws, and my siblings should any of them need assistance.

Being a successful entrepreneur is one thing, but the responsibility on keeping things going on strong for others is a cumbersome one to have to do it alone.

That’s why I started the company I’ve got now - an educational stand to help people help themselves without me getting as deeply involved in providing all by myself and burning out in the process.

4 golbguru 11.27.07 at 7:39 am

Earl: that’s right. In fact, I know many many immigrants who are in this situation. They haven’t yet felt the heat because they are still relatively young and their parents are still working, but I can see these people being sandwiched in the next 5~10 years down the line (although, I do know a few who are already under pressure).

5 Kamantha 11.29.07 at 7:21 am

I am already apart of this generation. I am 32 (only child) and have been taking care of my now 57 year old Mother for 5 years. So I have experienced having no money and being the sole breadwinner. Now that she is better but not enough to be on her own I am committed to debt elimination.

6 Carol D. O'Dell 11.29.07 at 7:57 am

I became my mother’s full-time caregiver when I was 39 years old, and the mother of three teenagers. I was married and could (somewhat) afford to lay my career aside to care for my mother who suffered from Parkinson’s and Alzheimer’s. It wasn’t easy–on any level–and we sacrificed and felt a significant hit to our finances by my staying home as well as picking up certain expenses. My mother’s insurance certainly left gaps.
I realize we were “lucky.” I had a supportive marriage, and he was willing to sacrifice, and my mother did have health care–although imperfect, and this caused us enormous stress. What about all the people who don’t have these resources?

My mother has passed away, and now I must make plans to not place my children in a similar situation with my care. I’m not Pollyanna, and I’m not sure the US will have their health care issues solved by the time I need to rely on the system.

Caregiving is a reality–and it’s important for families to love and care for one another, but I don’t think the financial burden should fall on over-strapped families.

We’re living longer, but are we “living better?”

~Carol D. O’Dell
author of
Mothering Mother: A Daughter’s Humorous and Heartbreaking Memoir
avaiable on Amazon

7 Fecundity 11.29.07 at 12:07 pm

Very interesting problem, and I liked the take on it that failure to plan for your own future will affect not only yourself but your children and grandchildren, who may then burden the following generations.

We’re going to be in this situation fairly soon. We’re expecting our first child. I’m an only child. My parents are financially well-off and already retired, though future health concerns may mean we have to spend much more time with them if not more money. Hubby’s parents will retire in the next few years, and are not financially prepared at all. I can foresee our having to help them significantly, as his brother won’t be able to help himself, never mind them.

It’s scary, and it’s good to have someone point out just how scary it really is. Gives me more willpower to clear out our remaining debt and focus on our retirement savings before our obligations rise exponentially.

8 Gofling Girl 11.30.07 at 6:22 am

The problem here begins with the individual in good health who retires without enough savings or without adequate health and long-term care insurance. I’ve been telling my parents, “please don’t give us extravagant gifts–I’d rather you save it for yourself and don’t need to move in with us in 10 or 20 years.”
The fact is too many people rely on Social Security, which is meant to supplement, not support you in your later years. My husband and I are planning to save enough without relying on our pensions or on social security, since those things are not guaranteed. I can’t imagine burdening my daughter when I get older–that’s not her responsibility in my opinion.

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