Invest Financial Planning

Sandwiched Between Elderly Parents and Growing Kids? 6 Ways to Stretch Your Dollar

Amelia McBain  |  October 16, 2018

Have to pay for both an aging parent and a growing kid at the same time? If you do, you’re probably part of the sandwich generation. Don’t worry, we're with you.

It’s hard to imagine having to take care of your parents — and your kids — until it becomes a reality.

A lot of us don’t think about it, but not having a plan for your parents can affect more than just your heart: It can affect your wallet, too.

“Because these are emotionally charged topics with the involvement of money, the tendency of people is to avoid the conversation,” said Mark Hamrick, senior economic analyst at “That is a recipe for a bad outcome.”

Senior care is expensive. If your parents don’t have sufficient savings or health insurance or long-term care  — you could be paying out of pocket to help them.

Researchers at the Center for Retirement Research estimated that if you take care of them yourself, you’ll likely spend 77 hours per month, which equates to an (unpaid) part-time job. Either way, it’s a doozy: The average hourly cost of home care is $21, which means it could cost more than $5,000 per month for daily 9-to-5 care.

Long-term care insurance prices vary, but you can count on the fact that they rise with age: If you wait to purchase, long-term care goes from an average of $2,978 for a couple at age 55 to $3,770 for a couple at age 60, according to the American Association for Long-Term Care Insurance.

And what if you have to pay for both an aging parent and a growing kid at the same time? If you do, you’re probably part of the sandwich generation (the group of us who are responsible for caring for both those younger than us and those older). According to Hamrick, they could both cost about the same — which is to say, they both cost a lot.

“It’s not unusual these days for a private university to cost $60,000 a year,” said Hamrick. “When you think about a nursing home costing several thousand dollars a month, we’re sort of in comparable territories there.”

Yikes. Ouch. Yeah. What do we do about this? I’m wondering the same thing.

Don’t worry, there are ways to prepare and get secured. We’re with you. These six steps can help:

Assess your Assets and Level of Care Needed

If your parents are still healthy enough to take care of themselves, it’s important to sit down with them to review a full list of assets, accounts and incomes. Ask what they have saved for their retirement, where they want to live and what needs to be done in a medical emergency.

If they’re already in need of care, figure out what assets they have and what care is actually needed. You don’t want to pay for assisted living now, when they might only need occasional visits from an in-home care professional.

Save, Save, Save

The best way to plan for your parents’ retirement, your kids’ college and your retirement, too, is by saving aggressively. Budgets are the best way to squirrel away some money, but once-in-a-while things like holiday bonuses can be used to save, too.

“People should keep these kinds of costs in mind when making their saving plans, realizing that there is a large probability that they may need to spend resources, time or money on elderly parents,” said Gal Wettstein, a research economist for the Center for Retirement Research at Boston College.

Look into Long-Term Care Insurance, Now

A long-term care insurance policy helps cover the costs of that care when you have a chronic medical condition, a disability or a disorder like Alzheimer’s disease. Most policies will reimburse you for care given in places like your home or a nursing home. You never know if you or your parents will need it, but just like any other kind of insurance, it can be a godsend in case something unexpected happens. Though this kind of insurance has gotten more expensive in recent years, it’s worth looking into when you or your parents are nearing 50.

Take Advantage of Tax and Government Benefits

Take full advantage of different accounts and programs that are available to you. If you’re qualified, you can open a health savings account for a parent, which allows you to put money aside tax-free for health costs — including the costs of premiums on policies like long-term care insurance.

For your children,  529 plans have huge tax education savings benefits: All withdrawals are tax-free and all gains are tax-deferred when used for expenses related to education. Same thing goes for Coverdell education savings accounts. One key difference is that Coverdells have a $2,000 yearly contribution limit, whereas 529 plans have limits in the hundreds of thousands (it varies by state).  Another thing to keep in mind is that with Coverdells, once the student hits 18, the student controls the account. 529 plans may be a better option for your family if your child is known to overspend and you’d like to control the funds.

Invest in your own Retirement (So your Kids Don’t Have to Pay for You in the Future)

Alice Zulkarnain, another research economist for the Center for Retirement Research at Boston College, said that adults who take care of elderly parents tend to retire earlier, “before they intend to.”

“That missed labor income adds up to a large effect,” she added. In other words, that’s a lot of income they’ve lost out on — and, if they have primarily saved for retirement though 401(k)s, that’s money lost for their retirements, too.

That’s all the more reason to make sure your retirement savings are good to go. If your company matches on 401(k) contributions, take full advantage. You can also open a Roth IRA if your company doesn’t have a 401(k) option — or if you feel like saving a little more. Roth IRAs are great: You pay taxes upfront, which means the money you withdraw in old age is tax-free, so if you know you’ll retire in a higher tax bracket, they make great sense taxwise.

No matter what your finances look like during this time, it’s hard. We get it. And so do so many other ladies, especially those in the Working Daughter Facebook support group. If you need a little extra support, turning to women who will understand you is never a bad call. And remember, we’re here for you, too. Join the HerMoney Facebook group of like-minded ladies looking for more control and less chaos.

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