Financial Independence for the Sandwich Generation

Insights from experienced financial professionals.

The “Sandwich Generation” faces a lot of struggles. If you’re unfamiliar with this term, it describes a demographic where usually middle-aged individuals must support aging parents at the same time they’re raising children. This situation can create an emotional and financial strain.

In general, this generation spends over 1,000 hours on average taking care of aging parents and children, which costs an average of $10,000 per year.¹ This situation may require their financial comfort to be put on the back burner. However, there are ways that the sandwich generation can work toward greater financial independence and a brighter financial future.

Make a Plan to Tackle Debt

Credit cards and other debt are among the most significant problems for people in the sandwich generation regarding financial independence. Over the past few years, credit card balances have reached record levels as consumers try to keep up with inflation. As these balances continue to soar, the sandwich generation is finding themselves paying a significant amount in interest and having a higher debt-to-income ratio.²

Eliminating even a portion of high-interest debt may save you thousands of dollars in the long run. Come up with a plan to reduce your debt, whether paying high-interest rate debt down first or paying off lower balances and snowballing those payments to the next debt. Minimize your spending and put aside a certain amount of money each month specifically to reduce your overall debt.²

Make Savings a Priority

When you don't have much money to put away in savings, you may forgo the entire idea. Even a little bit of savings each month will help you build an emergency fund and begin to put it away for retirement. If you have a 401k match, consider upping the percentage by even 1%. The money will be taken out pre-tax, and you will gain additional savings from the match. You may also want to set a specific amount of money each month to go into an emergency account to lessen the financial burden that comes with the unexpected. Even if it is $100 a month, it will eventually add up if you stick with it.¹

Find Ways to Lessen the Financial Burden

Another way to start gaining financial independence is by finding ways to lessen the financial burden. If you have siblings, see if they are able to assist with the care of your parents to help lessen your financial costs. You may also want to find out what local resources are available for your aging parents, such as meal programs and free transportation. Many senior programs are available to help lower the cost of care and assist with some of the daily tasks you may typically have to perform.¹

While the sandwich generation will face more financial struggles than some members of other demographic groups, there are still small changes you can make that will enable you to work toward financial independence and improve your financial outlook.

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^Footnotes:

^{1 Sandwich Generation: What the Term Means, How to Manage, Investopedia, https://www.investopedia.com/terms/s/sandwichgeneration.asp}

^{2 The ‘Sandwich Generation’ Is Financially Taking Care Of Their Parents, Kids And Themselves, Forbes, https://www.forbes.com/sites/jackkelly/2023/02/24/the-sandwich-generation-is-financially-taking-care-of-their-parents-kids-and-themselves/?sh=187c43542af4}