The Sandwich Generation: Thoughts from the Middle
Hello, my name is Tim. I’m in my forties. I’m happily married with kids. My mom is a widow in her eighties, and my in-laws are in their seventies. My wife and I are bona fide members of the sandwich generation!
If you haven’t heard the phrase "sandwich generation," let me start with a little background. This phrase was coined by two women, Dorothy Miller and Elaine Brody, in 1981, and refers to a group of individuals who are simultaneously caring for both their aging parents and their young children. The Pew Research Center profiles the sandwich generation as adults "who have a living parent age 65 or older and are either raising a child under the age of 18 or supporting a grown child." Typically, it includes adults in their 40s or 50s.
Generation X, born between 1965 and 1980, is fully qualified to call itself the sandwich generation. Please welcome Generation Y, aka the Millennials, who are just joining us, having been born starting in 1981.
Say it together now: "Hello, our name is Generation X and Y, and we are in the sandwich generation."
The financial challenges Generations X and Millennials face from the middle of the sandwich are many. In my own life, my wife and I are dealing with questions and concerns regarding:
Photo by Isaac Quesada on Unsplash
Our Parents
Can our parents age in place? Who will provide care if needed? Are they interested in an assisted-living facility or in home care? Can they afford either? Should we take our parents on tours of living options now while they can make their own decisions? Do they have proper estate planning, including health care directives and wills, established? Who is going to take our parents to medical appointments or grocery shopping? What are our siblings’ views on all of this? Will they participate in parental support if needed?
Our Kids
Public school or private school? Should we save for their college or challenge them to pay for it? Can we pay for it, or will we need to take out loans? Should we encourage them to go to college or find another path, like a trade school? How long will we support them after high school? Are they learning enough about personal finance to succeed on their own?
Ourselves
What about us? How should we prioritize our needs versus those of our kids and parents? Are we saving enough for retirement? As our kids grow and our parents' needs change, is our house right for the future? Do we remodel or move? Can we afford to change our housing situation? Do we pay off the mortgage or refinance? Do we pay off debt with low interest rates or invest for the future?
I speak with fellow Generation Xers and Millennials daily, dealing with very real issues from the middle of the sandwich. One recent example involved a family with two young kids and a widowed mom living with them. Mom experienced a serious health issue. They had already decided to relocate to better schools and are now faced with finding a home that can accommodate all their needs, including Mom’s physical limitations. Is now the right time to buy or sell? What is happening with interest rates and home prices? Is their single-earner household at risk because of layoffs in the technology sector? Can the stay-at-home spouse handle all the care needs of the mom and kids by themselves? Does the stay-at-home spouse need to go back to work?
There are common financial challenges that Generation X and Millennials share with their peers and many that are unique, but they are all very real. There are answers and solutions to each of these individual concerns, but on a macro level, I think it all starts with communication.
Communication with Parents
My parents were born at the tail end of the Silent Generation—those born between 1928 and 1945—and were raised by Great Depression-era parents. As children, they learned frugality and thriftiness, as well as how to remain silent and private about financial matters. I shared with them that it was important for me to understand their financial situation so that I could plan for their needs and provide support. They understood, eventually, that their financial life had an impact on mine, and the lines of communication were opened. It was an opportunity to discuss their vision for their remaining years, where they wanted to live, how they wanted to address potential needs for physical and mental health, what those things might cost, and how it was going to be paid for. My dad handled the money in the family, and when he passed suddenly and unexpectedly, it was tremendously helpful to have awareness of their finances so I could help maintain my mom's lifestyle through this difficult time. Because we had this conversation about money, I could take a more active role in supporting the well-being of my mom.
Consider starting a conversation with your aging parents. It's better to know the good and the bad than for it to be a surprise.
Communication with Kids
Talking with our kids about money doesn’t have to be hard. It’s as simple as living your financial life and telling them what is happening:
If I’m at a store with the kids checking out at the register, I share, "I’m paying for this with my credit card right now, and at the end of the month I will send a payment to the credit card company for all the things we bought this month. The payment will come from our checking account, where the money from my job gets deposited. Any thoughts or questions?"
Honestly, I rarely visit stores in person anymore thanks to online shopping, so when we grab boxes off the porch, that version is, "I ordered this online; it was the best value I could find in my research. I paid for this with my credit card, which I will send payment for at the end of the month. The payment will come from our checking account, where the money from my work gets deposited. Any thoughts or questions?"
Hopefully, sharing with our kids how money and finances work in our daily lives will pay dividends. First, it will model for them that it is safe and helpful to talk with their parents about money. And second, it will give them a baseline of knowledge on how to deal with money intelligently going forward.
Communication with Spouses and Partners
Generation X and Y couples are charged with identifying and balancing the financial priorities that maintain the well-being of their parents, kids, and themselves. The following is an outline of how you might work through goal setting and prioritization.
Create a net worth statement, which shows the difference between your assets and liabilities. In some family relationships, one person is responsible for the bulk of bill payments and money movements. In other families, each person handles their own expenses or has specific responsibilities. It is important to start the conversation on the same page, and a net worth statement is a great starting point.
The next step is to define your goals, both big and small, short and long-term. These do not need to be shared goals; they can be individual goals. Goals may include things like college tuition for kid #1, college tuition for kid #2, a house remodel, retirement, assisted living for mom in 2 years, etc. Assign expected costs to each goal; this may involve some research.
Then it’s time to prioritize the goals. Order them from most important to least important. This is likely where challenges arise because there are different ideas around importance. Remember that we each bring our own emotions and experiences to these conversations, and that influences how we prioritize goals.
After the prioritization process is complete, you can refer to the net worth statement to identify how the goals can be paid for, how much more needs to be saved, or maybe what goals need to be adjusted or reprioritized.
This process can be challenging, both technically and emotionally. It may be helpful to seek out professional assistance to help navigate these challenges and difficult decisions. This can include working with a financial planner, a tax professional, and an estate planning attorney.
Membership in the sandwich generation is no easy task. Communication is key. And get help if you need it!
My name is Tim Melia, and I am a CERTIFIED FINANCIAL PLANNER™ Professional. I would be happy to answer any questions you may have or discuss how this topic impacts your life and financial goals. Feel free to email me at tim.melia@emboldenfp.com. If you would like to learn more about working with Embolden Financial Planning LLC, please schedule a free, virtual introductory meeting.
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References
“Sandwich Generation Explained: Caught in the Middle - Chapters Health System.” Chapters Health System, 28 July 2022, www.chaptershealth.org/chapters-of-life-blog/families-caregivers/sandwich-generation-explained-caught-in-the-middle.
Parker, Kim and Patten, Eileen. “The Sandwich Generation.” Pew Research Center’s Social & Demographic Trends Project, 30 Jan. 2013, www.pewresearch.org/social-trends/2013/01/30/the-sandwich-generation.
“Silent Generation - Wikipedia.” Silent Generation - Wikipedia, 1 July 2021, en.wikipedia.org/wiki/Silent_Generation.
