The Sandwich Generation
Everybody has heard about the Baby Boomers, Generation X, Y and Z and now the Millennials. There’s another generation that a lot of people my age and a bit younger are finding themselves in, the Sandwich Generation. What’s that you ask? Sit back for a minute and I’ll explain.
What is the Sandwich Generation?
The Sandwich Generation is the group of people who have a living parent aged 65 or older and are also either raising kids younger than age 18 or providing financial support to grown children aged 18 or older. I have seen various age ranges for this group. I’m 57 and have three sons who are ages 17, 20 and 22. Both my wife’s and my mother are still alive. Her mom is in her early 80s and my mother just turned 79 the other day. Luckily for us, at this time, both of our mothers are independent, living on their own and have their own financial means.
Unfortunately, we are seeing and hearing lots of stories about people our age and younger who have parents that need assistance like nursing homes or assisted living. A lot of these people don’t have any type of long term care insurance and while they may have some form of income like Social Security, a pension or perhaps investment income, a lot of times it isn’t enough to cover the cost of the parents current living situation. Thus, the adult children are having to step in to help. This ranges anywhere from providing financial help to having the parents move in with them. If you ever want to test your wife’s love for you, tell her you want your mother to move in! Good luck!
In addition to having to take care of Mom, these lucky folks also have children either living at home, going to college or still needing financial help. My parents got married when my Mom was 20 and my Dad was 22. Jenny and I got married when we were 32. When I was 48, I asked my then 8 year old son, guess how old I was when Papa Brown was age 48? Of course, he didn’t know. I told him, I was 24. I had graduated from college, lived on my own and paid my own way. He replied, that’s weird! This is how the sandwich gets made.
People are getting married a little bit later. They have kids a little bit later. Their parents are living longer. College costs are rising. The cost of long term care and assisted living is really expensive. Particularly if you want something nice. Think of it like a club sandwich with this generation getting crushed between paying for their kids, saving for their own retirement and trying make sure their parents are taken care of properly.
What Can You Do?
I don’t know if I have any great fix for people who are already in this situation. You can do the usual, get a side hustle, cut back on expenses, have the kids go to community college instead of Harvard, etc. but by the time these issues start popping up, it’s hard to fix.
That being said, if you’re not quite getting shoved between the slices of bread, there are some things we can do to help our kids from having this pressure put on them. Here are a few ideas.
1: Save for your own retirement before you save for children’s education.
There are lots of ways to pay for an education. Go to community college. Go to an in state school. Use some of the tools that are available to compare costs and get the best deal. Get a loan. Whatever! The point is, there are many different ways to pay for an education but they don’t offer retirement loans. If you don’t have enough saved by the time you want to retire, what are you going to do? You can work longer, I suppose, but a lot of people have health changes that make it difficult or impossible to work in their later years. I have a saying: Getting old sucks. Being old and broke really sucks!
2: Get some form of long term care insurance.
If you’re in your 30s or 40s, this might be a bit premature, but when you start getting into your 50s and 60s you might want to add this one to your list of to do items. The statistics surrounding the need for some form of long term care as we get older are scary. I saw a piece that said 69% of people over the age of 65 will need some form of long term care. Women need the care longer than men and while one third of people will never need long term care, 20% will need it for longer than 5 years. Here’s a link to that article:
https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html
There are several different types of long term care insurance contracts. Some are stand alone policies that are similar to car insurance. If you need the coverage it pays out, but if you don’t use it, no premiums are returned.
There are also several variations of hybrid long term care policies that are a combination of a life insurance policy or an annuity with long term care insurance. The point of this piece isn’t to discuss all of the variations of long term care policies. The point is to get you to consider this as a way to keep future generations from getting stuck in the sandwich.
3: Get Your Financial House in Order
I have written previous blogs about some of the basics of financial planning like spending less than you make, having an emergency fund and sticking to a budget. I think this can really help everybody in the future. If most or all of your debt is paid off, you have a cash cushion, you have been investing regularly and you have the proper insurance, it couldn’t help but make things easier for your kids. It’s hard to take care of others if you have not taken care of yourself and vice versa.
Just about everybody has some area of getting their financial house in order that either, needs to be addressed or improved. Maybe it’s your budget. Maybe you know you need to update or even make a will. Perhaps you have been thinking about increasing your life insurance or adding that umbrella policy your agent has talked about. Whatever it is, do one little thing first. Call the attorney and set an appointment, for instance. Anybody can do that. Look online and sign up for YNAB or Mint or whatever. The hardest step is the first one, yet a body in motion tends to stay in motion. Pretty soon you have momentum and it gets easier from there!
In Conclusion….
A lot of Generation X and Late Baby Boomers are finding themselves in the Sandwich Generation. If your parents are requiring a lot a help, there might be too much you can do, but there are things we can do to keep this from happening to our kids and there future families. If this is something you would like to discuss, feel free to reach out to me. I’ll do my best to help you. As always, thanks for reading! KB