The Sandwich Generation and Caregiving: Financial Impacts to Retirement Savings

Linda Migliazzo |

Many people care for a loved one out of necessity as their family members can no longer care for themselves. More than one in ten people in the United States also care for an adult, spending about three hours each day on caregiving duties between their children and parents. These individuals are part of the sandwich generation, those sandwiched between the obligation to care for their aging parents and their children at the same time.

  • An estimated 11 million caregivers (28% of all caregivers) provide unpaid care to an adult while caring for their children.
  • The typical sandwich generation caregiver was born between 1965 and 1980 and is more ethnically diverse, younger, and newer to caregiving than other caregivers.
  • Roughly a third of sandwich generation caregivers report a high level of emotional stress, and a fifth report high levels of financial and physical strain.

Source: Mental Health America

Sandwich generation caregivers help with a wide range of household chores, social and companion needs, health-related and personal care, and managing finances. Often they are the bridge between Medicare or Medicaid services and have had to learn medical and nursing tasks from professionals to better care for their loved ones.

Most sandwich generation caregivers are employed and try to maintain full-time employment. However, many have to reduce their working hours, resulting in reduced pay. The financial implications are far-reaching:

  • Interrupted employment means interrupted retirement savings contributions
  • Savings depleting to cover living expenses
  • Increasing housing costs; moving into a larger home or paying out of pocket for a care facility
  • Reduced earnings impacting social security retirement benefits
  • Significant cuts to income or possible job loss.

If you are a sandwich generation caregiver or think you may become one in the future, your financial plan should reflect this life-changing event. In the same way that a financial plan recommends reducing debt and saving more for retirement, it can also illustrate your working year's retirement savings contributions and years of not contributing and the impact on your retirement security. Also, it is essential not to liquidate your retirement savings to make ends meet to provide care to someone else. 

Becoming a caregiver is a life-changing decision. If you are a caregiver or anticipate becoming one in the future, don't hesitate to get in touch with our office for a meeting to help you financially prepare for this phase of your life.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by Fresh Finance.

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