The Sandwich Generation: Don’t Go Broke Caring for Elderly Parents

Editor’s Note: Join me in welcoming Hank Coleman, new PT Money contributor and future certified financial planner. This week Hank is tackling the subject of caring for elderly parents. With Mother’s Day just around the corner, we thought it was a good time to address what to do if/when Mom and/or Dad need(s) financial help.

Sandwich Generation Caring for Elderly Parents

Will you be taking care of both a mom and daughter soon?

More Americans are raising their own children and at the same time caring for their elderly parents.

It is called the “Sandwich Generation”. Without proper financial planning, being a part of the Sandwich Generation can lead to financial ruin.

In the past 20 years, Americans have seen a dramatic increase in Baby Boomers that are not only caring for their own children but are also caring for their elderly parents. This of course is putting themselves into a struggle between the love of family and the enormous cost of caring for, essentially, two families. They are finding themselves sandwiched between a rock and a hard place with their finances often taking the brunt of the punishment.

Baby Boomers are finding themselves having their own children later in life, and their parents are living longer. In fact, according to the Pew Research Center, “about one-in-seven middle-aged adults (15%) is providing financial support to both an elderly parent and a child.”

The Sandwich Generation Experiences Financial Hardships

There are many upfront costs of caring for an elderly parent while you have children of your own. There are also some not-so-apparent costs. Baby Boomers often find themselves with one spouse having to work less hours at their normal day job in order to care for a parent or loved one who can no longer completely care for themselves on their own. This often comes at an inopportune time as younger children of baby boomers are often approaching their teenage years and college age where expenses are often increasing on that front as well.

Many of the Sandwich Generation find themselves having to drawdown their own retirement accounts in order to keep up with the rising costs of caring for ailing parents. So, who will be there for you when the baby boomer reaches the age of retirement or beyond? This sets up a vicious cycle of younger siblings or children caring for elderly parents for generations. Other families find themselves siphoning money from their emergency funds and reducing their savings and investments which could have devastating long-term consequences.

So, what is a Sandwich Generation family to do with ailing older parents? Here are a few things you can do:

Build a Team to Help

In order to be as successful as possible, you should consider assembling a team of experts that can help you navigate all of the financial aspects of being in the Sandwich Generation. You may want to include having an accountant, financial planner, lawyer, and estate planner on your team to help you navigate the tricky waters of caring for elderly parents. You shouldn’t have to do it alone, and the more help you get and help as early as possible will set you up for success in caring for your children and elderly parents.

Look for Long-Term Care Insurance

Another factor to help you with the financial burden of caring for older parents that you may encounter is purchasing long-term care insurance for your parents. Of course, you will need to purchase the long-term care insurance before you and your parents will need it for it to be affordable. Having long-term care insurance can help you and your parents with either in-home care or nursing home care should the need arise without having to tap too much of your parents or your family’s emergency fund.

Have the Difficult Conversations

Now is the time to have the difficult and frank conversations with your parents before it is too late. You need to discuss topics such as having a general power of attorney, medical power of attorney, updating records, locating important financial documents, and even the type of funeral and arrangements your parents want. While it is not a pleasant conversation to have, these are important topics to discuss while your parents and loved ones can have significant input into the conversation. If you wait too late, you may not be carrying out their wishes correctly or can even face time-consuming challenges.

Of course, your parents may not be very open to these discussions either. Many older parents do not feel comfortable talking about money and finances, among other things, with their adult children. Dave Ramsey calls it the “Powdered Butt Syndrome.” Your parents have powdered your butt and cared for you for decades. They will often resist the inclination to let you help them for a change with tasks that they once probably handled with ease. So, these topics must be approached with kid gloves more often than not. And, it helps to start easing into these talks as early and as often as possible.

Consider Adult Day Care Programs

You may be able to find an adult day care program for your ailing parents instead of quitting your job to care for them. While expensive–with many adult day care programs costing over $60 per day–this can be more affordable to many families than in-home care. According to Kiplinger’s, the average in-home healthcare aide can cost over $20 per hour or over $160 for an eight hour shift. The average for a private room in a nursing home can run over $200 a day. So, an adult day care may be another more affordable option.

Use Tax Benefits You Qualify For

You may be able to qualify for additional tax breaks if your parents live with you for over half of the year. You can also claim, in many cases, the cost of using an adult day care. You are typically able to contribute up to $5,000 per year to an employer’s healthcare spending account even for dependent care (this number is dropping due to Obamacare). Or, you can claim the dependent care tax credit on your income tax return. While this will only cover a portion of the cost of healthcare for your elderly parent, every little bit will help stem the cost for the Sandwich Generation.

Look to Cut Your Costs

If you find yourself faced with caring for your elderly parents and your own children, you should definitely reexamine your costs. Start by reexamining your family’s monthly budget. If you have not been writing down all of your family’s monthly expenses, now is the time to start. With a monthly budget, you can not only see where your money is leaking out of your family’s finances, but also areas where you can save in order to help pay for your parents care.

Increase Your Income to Help with Caring for Elderly Parents

While no one wants to hear that you may want to get a second job, a part-time job in addition to your regular job for at least one spouse in your family may be the extra push you need. An extra source of income can help to put your finances over the top and pay for your children and ailing parents. Having a second job may be the answer to help you keep from dipping into your retirement accounts or emergency fund to pay for your elderly parents’ care.

Cut Loose Your Boomerang Kids

There comes a time in our lives when we have to cut loose our children from the nest. Many American families are finding themselves with “Boomerang Kids” who come back after graduating from college. Either they have trouble finding a job or simply want to save money while living at home as an adult. Parents, of course, want to support their children, but it often comes at a cost and at a detriment to their own finances. If you are in the Sandwich Generation and find yourself caring for elderly parents, it may not be feasible to have your adult children come back home to live with you. Cutting loose the Boomerang Kids can help give you the financial boost you need to care for your parents instead.

Life is not easy for those in the Sandwich Generation who have to care for not only their own children but their elderly parents. There are many challenges associated with caring for two families that can put a strain on your family’s finances at often the most inopportune time. But, with a little prior planning and careful budgeting, you can help your family tackle the difficult situation of caring for elderly parents as they live longer.

Have you had to make difficult decisions to care for your elderly parents? What other tips should people facing this difficulty consider?

Photo by Elvert Barnes

Want My Free 31-Step Money Guide*?

Subscribe for free. Get my guide *31 Days to Improve Your Financial Life, welcome series, and regular Five Things digest. Join 30,000+ other followers.

Powered by ConvertKit

About Hank Coleman

Hank Coleman is a fan of everything personal finance. He's the creator of the popular site Money Q&A, as well as other financial sites. Hank is currently studying to become a CFP. His freelance writing work can be seen across a variety of top-notch publications in finance and investing.


  1. Nikita Brodskiy says:

    Welcome Hank, thanks for insightful advice. You are bringing up a great point: caring for both kids and the elderly can be really expensive. A good way to be prepared is to set up an automatic savings program early and dedicate a special account for that purpose.

    • Hank Coleman says:

      Nikita Brodskiy Thanks, Nikita. I appreciate the welcome. I’m glad to be here. Setting up automatic savings for this with a dedicated account is a great idea. Or, you could also increase your own family’s emergency fund above the 3-6 months of living expenses level if it looks like you will most likely care for elderly aging parents.

  2. Boomers have failed to raise independent children with appropriate life skills. The economy isn’t great, but it wasn’t great many times previously and we still went out into the world as adults without Boomeranging back to live with Mommy. Boomers have no one to blame for the “sandwiching” but themselves for not raising their adult children with an understanding that the free ride will end abruptly.

    • Hank Coleman says:

      @Leigh I understand your point. This of course in’t true for all the children of the Baby Boomers. Many have turned out just fine. What gets babyboomers into trouble and into the Sandwich Generation is having children much later in life as well as having their parents live longer. Some of the Sandwich Generation may be faced with their own young children who haven’t reached adulthood yet and who simply can’t leave the home because they haven’t reached collegiate age. Those are the ones who are struggling with aging parents as well as those who are letting their grown children boomerang back home.

  3. One option you leave out is to consider that it may not be your responsibility to care for the parents.  In some situations parents have been careless with their financial planning and will drain their children’s safety net if given an opportunity.  There are times when you need to care for your immediate family’s well being and cut out someone who will sink the ship for everyone.

    • Hank Coleman says:

      @duane You make a great point. While parents should be responsible for their own finances and medical wellbeing, it would be a very hard choice to cut out their needs for the greater good of the family and to not sink the ship. I understand your point, and that would be a very hard choice to have to make.

  4. @debtblag says:

    This sounds very tough. I know I’ve always thought I’d want to help out my parents as they’ve gotten older, but I don’t know that I’d be able to support them completely. Luckily, they’ve done pretty well for themselves and I have a few younger siblings that could help out. This post has definitely got me thinking so thanks for that.

  5. krantcents1 says:

    I was fortunate that I did not have to contribute to my mother’s finances. I saw firsthand how not having Long Term Care (LTC) insurance can drain your savings.  There was no LTC insurance when she was in her sixties.  That was over 40 years ago!  Of course, my wife and I have LTC insurance.

  6. The Military Guide says:

    Thanks for the guest post, Hank, PT, very timely.
    We’ve gone through this with my Dad for several years now.  If your parent doesn’t want to have “the talk”, then it’s not going to happen.  Don’t waste your time annoying them and poisoning your relationship.
    If their issues are financial, then the best you can do is recommend a family friend or CFP whom they’ll trust.  If their issues are medical then you should consult a geriatric care manager and make your own caregiver plans for when your elder has the inevitable crisis.

    The ideal situation would be their setting up their revocable living trust with you as an alternate/successor trustee.  At the very least they’d have a letter for you (in a secure place that you can access) with their account information and logins/passwords.  Powers of attorney for medical and financial matters would be great, but that requires “the talk” and some teamwork.  Otherwise you’ll be spending several thousand dollars to obtain a court order for guardianship and conservatorship.
    Speaking of thousands of dollars, this is another good reason to have your own personal emergency fund.  I spent over $8000 of my own funds on Dad’s care (and legal bills) before he was able to reimburse me.
    I share other resources (books & websites) on my blog.  Today Dad is happy and doing well, but “the talk” could have saved us nine months of frustration and expenses.

  7. CommonCentsWealth says:

    Man, this sounds extremely tough.  I hope I never find myself in this situation, but if I do then I’d have to utilize a lot of the points you mentioned above.

  8. freemoneyminute says:

    Luckily, my parents are relatively young (50’s and 60’s) and my kids will be older by the time they need help.