The Sandwich Generation: Dealing with Aging Parents While Raising Kids
This article will look at tips and financial considerations for anyone dealing with aging parents and adult children at the same time.
Are you “sandwiched” financially and emotionally between an aging parent and an adult child? According to a recent study, nearly half of Americans in their 40s and 50s have a parent aged 65 or older and are either raising a young child or financially supporting a grown child (age 18 or older).1 Among this group, 15% are providing financial support to both an aging parent and a child.
While the “Sandwich Generation” is a demographic trend that has been documented for some time, the financial implications associated with caring for multiple generations of family members has been escalating in recent years, with the bulk of the financial pressure coming from adult children as opposed to aging parents. More than a quarter of respondents (27%) provide primary financial support to their adult children, up from 20% in 2005. By contrast, just 21% of middle-aged adults report having provided financial support to an aging parent in the past year, a number that has not changed since 2005.1
One explanation for the growing need for financial support among the nation’s young adults is the toll that the Great Recession has taken on this demographic group. According to U.S. government data, the percentage of young adults employed in 2010 was the lowest it had been since 1948.2
Despite the added financial resources being directed toward the young, the study found that, in general, the public places more value on supporting aging parents than on supporting grown children. Among all survey respondents, 75% said adults had a responsibility to provide financial assistance to an aging parent in need, while only 52% believed parents had the same responsibility to help out an adult child.1
What Can You Do?
If you are supporting both a parent and a grown child there are a number of resources and support services you can turn to for help. For your parents, consider the following.
- Enroll them in adult day care or hire a home health aide. Whether they live with you or on their own, you may need to consider helping them to manage medication, to conduct daily tasks such as bathing or meal preparation, and to make arrangements for assistance with household chores. A visiting nurse and home care agency may provide assistance in these areas. The average adult day-care program costs $70 per day, and a home health aide costs an average of $21 per hour.3
- Consider engaging a health care advocate. Professional health advocates or private health advisories can ease the burden associated with health care planning. In addition to facilitating and expediting care during major illnesses, private health advisories can also help you develop a comprehensive and customized health strategy based on your individual needs and personal health issues.
- Investigate potential tax breaks. You may be able to contribute up to $5,000 per year to your employer’s dependent care flexible spending account, if available, provided your parents live with you more than half the year and you pay for them to attend an adult day-care program. If you don’t have a flex account, you may be able to claim the dependent-care credit on your tax return, The maximum amount of expenses to which the credit may be applied is $3,000 for one dependent or $6,000 for two. The applicable percentage of the maximum amount of expenses that you receive as the credit varies with your income, from a high of 35% of the maximum amount if you have an income of $15,000 or less, to a minimum of 20% of the maximum amount if your income exceeds $43,000.
- Search online for local support services. In addition to day care and health aids, many states and communities offer other services that can help both you and your parents cope. Look online under “elder,” “geriatric” or “senior” care services for support programs near you.
- Encourage parents to update their estate plans and beneficiary designations. Even if they already have an estate plan in place, there is a good likelihood that it could be out of date and may not take into consideration life events that have transpired over the years, such as the birth of grandchildren, divorces, remarriages or other factors.
For dealing with your grown children, consider the following.
- First, talk to them about your financial realities. Live-at-home adult children may not be aware of what it costs to run a home while supporting aging parents at the same time. Letting them know the costs you face each month makes those costs real to them, and can encourage them to shoulder some of the responsibility themselves.
- Share the common costs. Most live-at-home adult children are there for a reason, often due to lack of a job or inability to afford a place of their own. But that does not mean they should not shoulder a portion of household expenses. Work out a realistic rent or cost-sharing arrangement and stick with it.
- Separate the individual costs. Is your live-at-home son or daughter a finicky eater? Do they demand certain foods or sundries that you would not buy otherwise? Then let them pay for them. They’ll learn to appreciate what their tastes are actually costing, and avoid resentments on your part.
- Share the chores. Assigning chores and responsibilities may seem obvious, but often it’s overlooked, leaving mom and dad to do all the work. Garbage, lawn care, housework, laundry–make it clear to all who is responsible for what task.
- Don’t make it too comfortable. If your goal is to eventually nudge your fledglings out of the nest, you need to provide incentive. That means not treating them as permanent guests, but as temporary live-at-home adult children, with obligations and responsibilities of their own. In the end, they will appreciate it as much as you.
1Source: Pew Research Center, “The Sandwich Generation: Rising Financial Burdens for Middle-Aged Americans,” January 2013.
2Source: U.S. Bureau of Labor Statistics.
3Source: MetLife Mature Market Institute, The 2012 MetLife Market Survey of Nursing Home, Assisted Living, Adult Day Services, and Home Care Costs, November 2012.
Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its affiliates and Morgan Stanley Financial Advisors or Private Wealth Advisors do not provide tax or legal advice. This material was not intended or written to be used, and it cannot be used, for the purpose of avoiding tax penalties that may be imposed on the taxpayer. Clients should consult their tax advisor for matters involving taxation and tax planning and their attorney for matters involving trust and estate planning and other legal matters.
If you’d like to learn more, please contact Matthew Glass at 973-912-7714 or firstname.lastname@example.org
Article by Wealth Management Systems Inc. and provided courtesy of Morgan Stanley Financial Advisor.
The author(s) are not employees of Morgan Stanley Smith Barney LLC (“Morgan Stanley”). The opinions expressed by the authors are solely their own and do not necessarily reflect those of Morgan Stanley. The information and data in the article or publication has been obtained from sources outside of Morgan Stanley and Morgan Stanley makes no representations or guarantees as to the accuracy or completeness of information or data from sources outside of Morgan Stanley. Neither the information provided nor any opinion expressed constitutes a solicitation by Morgan Stanley with respect to the purchase or sale of any security, investment, strategy or product that may be mentioned.
Morgan Stanley Financial Advisor(s) engaged Wealth Management Systems, Inc. to feature this article.
Matthew Glass may only transact business in states where he is registered or excluded or exempted from registration www.morganstanley.com/fa/rhggroup. Transacting business, follow-up and individualized responses involving either effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, will not be made to persons in states where Matthew Glass is not registered or excluded or exempt from registration.
© Morgan Stanley Smith Barney LLC. Member SIPC