Being the 'sandwich generation'

Tips for when you're the caregiver of your children and your parents

12 Jul 2018


  • Nearly half of American adults in their 40s and 50s have an elderly parent and are either raising a young child or financially supporting a grown adult child.
  • Although it may be uncomfortable, it is critical to broach financial topics with your aging parents sooner rather than later.
  • Take financial care of yourself. Breaking up your expenses can be useful because it aligns the time horizon of your investment with your personal spending patterns.
  • Don't neglect your personal retirement savings. As our strategists note in the May 2018 issue of Modern Retirement Monthly, around 40%-50% of couples will live into their 90s, and it's important to stress-test your financial plan to make sure that it's resilient to a longer-than-expected retirement period. 

Nearly half of American adults in their 40s and 50s have an elderly parent and are either raising a young child or financially supporting a grown adult child.1 That means millions of people juggle working full time with caregiving duties.

These so-called sandwich caregivers face unique responsibilities. They must look after the needs of young and old family members, while also taking care of themselves. Additionally, they often serve as the financial "filler" between their children and their parents. In fact, about one in seven middle-aged adults (15%) is providing financial support to both a child and an aging parent.1

If you're a sandwich caregiver, you likely have many questions: Am I giving my children the best care? Will my parents be comfortable as they age? But regardless of your specific concerns, it is important to create a plan for your family's whole wellbeing that also allows you to achieve your financial goals.

Learn how to minimize risks and take proactive steps with these wealth-planning tips from Justin Waring, Investment Strategist Americas, UBS.

Start the conversation now

Money is an emotional topic. While it can be difficult to accept that your parents are getting older, you may also feel guilty asking for help. This often results in families delaying important conversations until it's too late.

Although it may be uncomfortable, it is critical to broach financial topics like retirement and paying for long-term care sooner rather than later. Waring suggests having open and honest conversations on a regular basis to plan effectively. "Costs that your parents need help with may come as a surprise, which can be stressful," Waring says. "It is important for everyone to be on the same page."

Grow your family—and your wealth

As a sandwich caregiver, you need to optimize your finances to take care of your children and still have enough left for what's important to you, too.

Setting aside capital for a specific goal helps take advantage of a behavioral bias called "mental accounting"—people's tendency to put their money in mental "buckets" based on factors such as how they intend to spend it. Waring points out that this can help simplify and automate saving and investment to meet specific goals. For example, a 529 college savings plan can make it easy to allocate funds, while also benefiting your children's future.

Waring adds that segmenting your investments for specific goals can also align the time horizon of your portfolio with that of your spending goals—a powerful tool for looking through day-to-day market volatility and focusing on long-term compounding of your investments.

Tend to your own financial wellbeing

Don't neglect your personal retirement savings, says Waring. "You don't want to get into a situation where you can't contribute to your 401(k) because you have too many expenses for others. If your parents live into their 90s, it's likely that you will, too," Waring adds. In the May 2018 issue of Modern Retirement Monthly, "What if you live to be 100?" our strategists note that actuarial tables estimate a 40%-50% chance that at least one spouse will live into their 90s. In this report the strategists also recommend "stress-testing" financial plans for the risk of a longer-than-expected retirement, which may uncover potential risks such as inadequate healthcare saving.

You should also use any tax-advantaged accounts that you can access, such as a 401(k), IRA or health savings account (HSA). Waring notes that HSAs are often overlooked but that their tax advantage can be even more powerful than retirement accounts. HSA contributions and investment gains are generally not taxed, and neither are qualified distributions (usually health care expenses). According to Waring, investors should consider prioritizing HSA contributions as a savings vehicle, just in line after maximizing the amount that their employer matches on 401(k) contributions.

Think about succession

Stay up to date on your state's tax law. There may be significant tax advantages to creating an estate to pass along and protect your assets. Speak with a tax advisor to devise the best plan for you.

Waring encourages clients to develop an overall investment plan as a family now. "Don't put off investment discussions until an untimely death or health scare. Consider setting aside a 'family investment account' and jointly manage these funds as a family. This can be educational for your children and grandchildren, help your family develop shared values and open a dialogue that can help you prepare for adverse scenarios. It can also be a fun way of planning for family trips and adventures!"

Are you financially prepared for all that lies ahead? Together we can find an answer. Connect with your UBS Financial Advisor or find one.


Research from CIO GWM is provided by UBS Financial Services Inc. UBS Financial Services Incorporated of Puerto Rico is a subsidiary of UBS Financial Services Inc. In Canada, research from CIO GWM is provided by UBS Investment Management Canada Inc.

The views expressed in the research provided do not constitute a personal recommendation or take into account the particular investment objectives, investment strategies, financial situation and needs of any specific individuals. They are based on numerous assumptions. Different assumptions could result in materially different results. We recommend that you obtain financial and/or tax advice as to the implications (including tax) prior to investing.

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