Navigating the Financial Squeeze: The Realities of the Sandwich Generation

“Sometimes, carrying on, just carrying on, is the superhuman achievement.”

– Albert Camus

Life has a way of throwing curveballs just as you start feeling like you have things under control – building your career, saving for retirement, having a family and so on – but at some point, you suddenly find yourself responsible for more than just your own household. It often happens overnight: a parent falls, receives a diagnosis, or can no longer safely live alone. The phone rings, and in that moment, your life changes completely. Aging parents need care. Kids still depend on you. And your financial priorities are stretched in ways you never expected.

Welcome to the Sandwich Generation.

Being caught between supporting older and younger generations isn’t just emotionally taxing – it’s financially draining. One day, you’re planning your family vacation; the next, you’re researching nursing homes, organizing medical appointments, and wondering how to afford both college tuition and home healthcare costs. The whiplash is real, and the stress is relentless. The challenge? Finding a way to provide for your family without sacrificing your own financial future when every hour of your day and every dollar in your account seems to be claimed by someone else’s needs.

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The Financial Reality of the Sandwich Generation

The traditional idea of financial independence is often upended for those in the Sandwich Generation. Instead of hitting their peak earning years and focusing on their own long-term security, many find themselves caught in a cycle of financial obligation to both their parents and children.

The Most Common Financial Strains:

• Elder care expenses – Assisted living, home care, medical bills, and long-term care planning. These costs often appear suddenly and escalate quickly.
• Children’s financial dependency – College tuition, student loans, daily living expenses, and even adult children moving back home due to economic pressures.
• Retirement at risk – The temptation to pause or reduce contributions to retirement accounts to cover current financial demands, potentially costing hundreds of thousands in lost growth.
• Career disruptions – Some cut back on work hours or leave the workforce entirely to provide unpaid caregiving.

These burdens don’t just strain bank accounts – they also take an emotional toll. The mental load of managing multiple generations’ needs simultaneously can be overwhelming. It’s no surprise that many in the Sandwich Generation feel overwhelmed, exhausted, and financially insecure. The constant juggling act leaves little time for self-care, leading to burnout that affects both mental and physical health.

How to Prioritize Competing Financial Demands

When it feels like everything is a priority, how do you determine where to put your money first? The answer: protect your financial foundation first before trying to help others. This can often feel counterintuitive as your instinct may be to throw money at the immediate problem. There is a reason though why in an airplane emergency they tell you to put your mask on first before helping your child – you are no good to anyone if something happens to you. A few thoughts:

1. Secure Your Own Retirement Savings – The biggest mistake many in the Sandwich Generation make is sacrificing their own financial future to help others. Remember: there are no loans for retirement. Prioritize maxing out 401(k) contributions and maintaining a healthy investment strategy.
2. Build an Emergency Fund – With multiple people depending on you, financial surprises are almost inevitable. Aim for at least six months of essential expenses in liquid savings.
3. Set Boundaries on Financial Support – While it’s natural to want to help loved ones, there’s a difference between support and financial enabling. Set clear expectations about what you can and cannot contribute.

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Caregiving Costs: How to Financially Plan for Aging Parents

Caring for an aging parent is one of the most complex financial challenges people face. With rising healthcare costs and longer life expectancies, the financial burden can be overwhelming if not planned for properly.

Take a moment to imagine a scenario where one or both of your parents needs full time help – what will you do? How will the costs be covered? It often seems like it will never happen to you – until it does. Then in an instant you are faced with the reality of how life would really look if your parents lived with you, if they needed assistance in their home, or if they needed care elsewhere.

The transition often comes without warning: Your independent father falls and breaks his hip. Your mother’s mild forgetfulness accelerates into dementia. The parent who never asked for help suddenly can’t manage alone. These situations rarely announce themselves with convenient advance notice – they arrive as emergencies, demanding immediate solutions to complex problems.

Understanding the Costs of Elder Care

Elder care expenses vary widely depending on the level of care required. According to CareScout, the 2024 monthly median cost for in home care was over $6000 and nursing home care around $10,000. This will vary by state among many factors, but this gives you an idea. If your parents don’t have adequate savings or long-term care insurance, you may be faced with some difficult decisions about how to cover these costs.

Keep in mind as well that the process of finding agencies to work with, facilities and so forth is very time-consuming, paperwork can feel overwhelming – and the rest of life doesn’t stand still while you manage all of this. Many caregivers report spending 20-30 hours per week on care coordination alone – the equivalent of a part-time job on top of their regular employment and family responsibilities.

The key is to start understanding some of your options in advance – don’t assume this won’t happen to you. Just like any contingency plan, having a knowledge base before you need it can make an overwhelming situation manageable when (not if) this reality arrives.

Funding Options for Elder Care

Let’s take a look at various options and provide a basic overview  of each.

Long-Term Care Insurance – If your parents have a policy, understand what it covers and when benefits kick in. Typical policies cover in-home care, assisted living, and nursing home care, but often have elimination periods (waiting periods) before benefits begin.

Medicaid Planning – Medicaid can cover nursing home care, but qualification rules vary by state and are incredibly complex. Planning ahead is essential to avoid spending down all assets. Demystifying Medicaid Planning:

• Look-Back Periods: Medicaid examines all financial transactions for the 5 years prior to application. Any gifts or transfers for less than fair market value during this period can trigger penalties.
• Exempt Assets: Certain assets don’t count toward Medicaid eligibility limits, including a primary residence (with equity limits), one vehicle, personal belongings, and burial funds.
• Income Requirements: Most states have monthly income caps for Medicaid eligibility. In some states, income above the limit can be directed into a “Miller Trust” to maintain eligibility.
• Spousal Protections: Community spouses (those not requiring care) are entitled to keep a portion of the couple’s assets and income to prevent impoverishment.
• Medicaid Estate Recovery: After a beneficiary’s death, states may seek reimbursement from the estate for the cost of care provided.

Working with an elder law attorney specialized in Medicaid planning is crucial, ideally 5+ years before care is needed. Last-minute planning options exist but are more limited.

Veterans Benefits – If your parent is a veteran, they may qualify for Aid & Attendance benefits, which can provide over $2,000 monthly for a veteran and spouse needing care. Eligibility requirements include:

• At least 90 days of active duty with at least one day during wartime
• Honorable discharge
• Medical need for assistance with activities of daily living
• Financial need (income and asset limitations apply)

Family Cost-Sharing Agreements – If you have siblings, don’t carry the burden alone. Discuss splitting costs or rotating caregiving duties. Consider creating a formal family caregiving agreement that outlines:

• Financial contributions from each family member
• Caregiving responsibilities and time commitments
• Compensation for the primary caregiver, if applicable
• Plans for respite care and time off
• Decision-making processes for major care decisions

 Home Equity Options – For parents who own their homes, options include:

• Reverse Mortgages: Allow homeowners 62+ to convert home equity into cash while remaining in the home. (for more on this read our article: HERE)
• Home Equity Lines of Credit: Provide flexibility to draw funds as needed.
• Sale-Leaseback Arrangements: Selling the home to family members who then allow parents to remain as tenants.

Legal & Estate Planning Considerations

If your parents haven’t created an estate plan, now is the time. Important documents to have in place include:

Durable Power of Attorney – Ensures someone can handle financial decisions if they become incapacitated. Without this, you may need court approval for even routine financial matters.

Healthcare Proxy & Living Will – Outlines medical decisions and end-of-life care wishes. Prevents family conflicts over medical decisions and ensures your parent’s wishes are respected.

Will & Trusts – Avoids probate issues and ensures assets are distributed according to their wishes. Consider specialized trusts like:

• Revocable Living Trusts: Avoid probate while maintaining control during lifetime
• Special Needs Trusts: Protect disabled beneficiaries’ eligibility for government benefits
• Irrevocable Trusts: May protect assets from long-term care costs if established outside the Medicaid look-back period

Having these legal protections in place will prevent financial chaos later on. Remember that legal documents vary by state, and online templates rarely account for individual circumstances. Working with an elder law attorney is the safest approach.

For additional information here are a few articles we published back in January:

• The Basics of Estate Planning: Wills, Trusts, and Why They Matter
• The Hidden Costs of Poor Planning: Titling of Assets and Avoiding Probate Pitfalls
• The Emotional Side of Estate Planning: Passing Down Values Alongside Your Assets

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Multi-Generational Money Talks: How to Have Hard Conversations With Parents & Kids

Talking about money with family isn’t easy, but avoiding it can lead to financial disasters. The best approach? Open, honest, and proactive discussions.

Talking to Aging Parents

• Start Early – Don’t wait until a crisis to discuss finances. Ask about their savings, debts, insurance, and long-term care preferences while they are still able to make decisions.
• Frame It as Protection, Not Control – Instead of saying, “What’s your financial situation?” try, “I want to make sure we’re prepared for anything that comes up.”
• Address Estate & Healthcare Planning – Encourage them to have legal documents in place to avoid family conflicts later.
• Use Specific Conversation Starters: “I was reading about how important it is to have powers of attorney. Do you have those documents in place?”…”If something unexpected happened, would you want to stay in your home with care or consider other options?”…”Mom/Dad, where do you keep important documents like insurance policies or banking information?”

Talking to Kids (Including Adult Children)

• Teach Financial Independence – If you’re financially supporting them, set clear expectations for when they need to take over expenses.
• Set Boundaries on Parental Support – Whether it’s helping with student loans or allowing them to live at home, decide what’s temporary and what’s sustainable.
• Encourage Smart Financial Habits – Help them understand saving, investing, and avoiding debt so they don’t repeat financial mistakes.
• Be Transparent About Your Limitations: Don’t shield your children from the reality of your financial constraints. Explaining that you’re balancing multiple responsibilities helps set realistic expectations.

Talking to Siblings & Extended Family

• Share the Responsibility – If you’re the primary caregiver, don’t shoulder all the financial and emotional burden alone. Ask siblings or other relatives to contribute.
• Put Agreements in Writing – Whether it’s splitting care costs or deciding who will handle estate matters, clarity now prevents conflicts later.
• Plan Regular Family Meetings: Schedule quarterly check-ins to discuss care needs, financial updates, and distribute responsibilities. This prevents resentment and ensures everyone stays informed.

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Final Thoughts: The Greatest Challenge of the Sandwich Generation

Balancing the financial needs of parents, children, and yourself is a monumental task, but it’s possible with the right planning. The key takeaways:

• Protect your financial foundation first – Your retirement and emergency fund must come before supporting others.
• Know your options for elder care funding – Medicaid, long-term care insurance, and VA benefits can ease the burden.
• Have the tough money talks – Open conversations with family members can prevent confusion, conflict, and financial strain down the road.

The financial squeeze of the Sandwich Generation is real, but by taking a proactive approach, you can navigate it without sacrificing your future. Remember that while this phase of life brings unprecedented challenges, it also offers opportunities for deeper family connections, teaching resilience to your children, and demonstrating the profound impact of compassionate care.

In the midst of the chaos and competing demands, don’t forget to acknowledge your own strength. As Albert Camus reminded us, sometimes just carrying on is indeed the superhuman achievement.