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Planning Your Finances When You’re in the Sandwich Generation

Being the filling in a sandwich can be tough, especially when you're in your 30s or 40s and are responsible for raising young children, supporting older kids, and caring for aging parents. According to a recent survey by the Pew Research Center, more than 50% of adults in their 40s find themselves in this situation, the "sandwich generation" position. This can take a toll on your time, energy, and finances.

Even if you don't provide financial support for your parents, the emotional and practical support they need can be overwhelming. Add to that the need to save for your own retirement, and it's easy to feel stretched too thin. But there are ways to navigate this challenging period and maintain a sense of balance in your life.

The Fulcrum – Your Retirement

A seesaw works because it rests on a fulcrum, or balancing point, that is stationary. You create a fulcrum for yourself by keeping an eye on your financial future. Saving for retirement is critical, and your 30s and 40s are a key period for saving.

It can be tempting to decrease retirement savings amounts or put it off completely when you have competing demands for your cash. But the money you save now is more valuable than the money you put in later because it has longer to grow.

Maxing out retirement savings and taking advantage of Healthcare Spending Accounts (HSAs) doesn’t just build your retirement nest egg – it can also help you lower your tax bill.

Putting a plan in place to keep retirement savings on track allows you to remove one source of stress and can provide discipline and clarity for other areas of your financial plan.

The Seesaw – College Savings and Aging Parents

The sandwich generation has two competing constituencies, children and parents. In a way, you are double-parenting as you begin to work towards launching your children into the world while helping your parents navigate aging in a significantly changed, much more expensive environment than they experienced with their parents.

Planning is vital, and planning requires knowledge and strategy. Besides the day-to-day expenses, most parents’ biggest issue is paying for college. It’s expensive and overwhelming, and it’s hard to be practical when college means so much to your child. Besides saving, there are a lot of things you can do:

  • Do some research on the college selection process – set a realistic budget of what you can contribute, and make scholarships and merit awards central to the selection criteria

  • File the FAFSA, even if you think you don’t qualify

  • Utilize 529 plans, even if college is imminent. The tax savings can be significant.

  • Incorporate college expenses into your cash flow plan

When it comes to your parents, knowledge is the first step. Whether everything is sailing along just fine, or you think there may be a crisis impending, it’s important to begin with an open-ended conversation. Start by asking what they want and what’s important to them. Once you’ve established a dialogue, you can move into more practical areas.

  • Understand their expenses

  • Assess insurance coverage

  • Get necessary documents in place – trusts, medical power of attorney, etc.

  • Research resources for help. Are there local agencies, like an elder council? Are they veterans?

Protect Yourself

It’s a good time to make sure you have your assets – and liabilities – protected.

  • Do you have enough life insurance?

  • Is it time for an umbrella policy?

  • Do you have long-term care insurance?

Build a Flexible Cash Flow Plan

Cash flow plans aren’t budgets, although budgeting is part of the process. The cash flow plan links your short-term money flows to your long-term plan, so you can see everything and then make decisions to help you achieve your goals. A good cash flow plan will help you see where you are, help you understand your true expenses, and where you can save money. But it can also be more strategic.

Should you refinance debt? Are you taking enough – or too much – risk in your investments? Should you redeploy assets to different investments? These are all strategies that a cash flow plan can help you assess.

The Bottom Line

The sandwich generation has a lot on its plate. But there are also resources to help sort through the challenges. Working with a financial advisor that understands the unique situation of this generation can help you feel more comfortable in your current situation and more confident about the future.


The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation.

This content not reviewed by FINRA

Alchemist Wealth, LLC is registered as an Investment Adviser with the State of Ohio and only provides advisory services in states where registered or otherwise exempt from registration. All information provided herein is for educational and informational purposes only and should not be viewed as investment advice. Any links to third party information or data are believed to contain accurate information at the time of publishing


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