A guide to managing finances as part of the sandwich generation

If you’re caring for children and aging parents, then you are a part of the “sandwich generation,” juggling between navigating both your own finances and your parents’. The good news is that you’re not alone: 32% of middle-aged adults provided regular financial support to their parents in the past year and 42% expect to do so in the future.¹

It’s a balancing act, but one that can be managed with planning and thoughtful discussions. Here are a few tips to guide you through these times.

1. Have ‘the money talk’ with your parents

Talking to your parents about their finances is a role reversal, so be mindful when starting these discussions. Approach the discussion with love and honesty.²

"You have to be respectful. Treat your parents the way you want your kids to treat you," says Cameron Huddleston, personal finance journalist and author of "Mom and Dad, We Need to Talk."³ Huddleston was the expert guest on our “Friends Who Talk About Money” podcast, speaking to a couple who are raising a toddler while also looking out for both sets of aging parents.

If you’re not sure where to start, or if your parents seem reluctant to open up, begin with general questions, such as if they’ve thought what their retirement might look like. It may take time for your parents to feel comfortable discussing money with you, so persistence and patience is key.⁴

Looping in a third party like a financial advisor to help review the retirement income plan for your parents is one way to help make these conversations easier, and can provide a sense of shared confidence.

2. Get all necessary documents in order

General conversations about how your parents see their retirement lifestyle can help you ease into more complicated topics like getting important documents in order (including wills) and paying for long-term care.⁵

“The more details you can get, the better,” Huddleston says. She suggests that you ask your parents to write down a list of all financial accounts (along with usernames and passwords), assets they have, and any other income sources.⁶

Have these conversations with your parents while they are healthy since documents like wills and trusts must be signed when people are mentally competent.⁷ Having these documents signed will also make it easier to deal with financial institutions and other parties.⁸

3. Set yourself up for retirement

It’s easy to overlook saving for your own retirement when you’re juggling the financial needs of parents and raising children. 

“When dealing with caring for parents and kids, you have to make some compromises, but don’t compromise your own retirement and financial security,” advises Huddleston.⁹

As your children mature, include them in discussions about what financial help they can expect.¹⁰ For example, there is a lot more outside support for kids paying their college tuition than for parents’ retirement.¹¹ “There are no loans for retirement, but there are for school.”¹²

If saving for college and saving for retirement are twin goals, a financial advisor can look into savings vehicles such as 529 plans, IRAs and sometimes help with 401(k) holdings selection.

If your parents need financial support, it’s also important for you and your partner to agree ahead of time about how much you can afford to give. Talk to your employer about your role as a caregiver for both parents and children, as some companies allow flexible work schedules or may have employee assistance programs which can provide you with resources for support.¹³

As you balance caring for both kids and aging parents, it's important to remember to care for yourself and your future.¹⁴ The healthier and more secure your finances, the more you can do for family members long-term.

For further tips and financial advice about how to make informed decisions and develop a plan for the future, connect with a John Hancock advisor today.