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Serving the sandwich generation

Caring for those who are caught in the middle

Picture this scenario: A couple’s recent college graduate son or daughter has landed that first job, but can’t quite afford to pay rental deposits on an apartment, so they foot the bill. Other expenses arise as well, and the “bank of Mom and Dad” stays open. Perhaps there’s also a younger sibling still living at home.

At the same time, one or both sets of the couple’s parents are facing medical bills or other financial challenges of aging, so, once again, this couple steps in with financial support.

Welcome to the sandwich generation

The term “sandwich generation” dates back to 1981 when Dorothy Miller and Elaine Brody coined the term primarily in use with social workers and gerontologists. At the time, the term typically applied to female Baby Boomers serving as caregivers to both their minor children and parents.1

"It is important for the sandwich generation to ask their parents about their end-of-life planning,..."

Today, Gen Xers in their 40s and 50s are typically the ones in the sandwich, and the term usually refers to families who provide some type of financial support to both young adult children and aging parents. Some sandwich generation families are also caring for minor children, which brings another layer of complexity to the table.1

It's likely that most financial professionals today serve at least a few of these clients, and while their needs can be challenging, this type of client also brings the opportunity to serve not only the provider sandwiched in the middle, but all three of the generations involved.

“It is important to open up the lines of communication with our parents,” says Tim Melia of Embolden Financial Planning. “They may be of a generation that is less inclined to discuss personal matters, like finances. It is important for the sandwich generation to ask their parents about their end-of-life planning, who is empowered to make decisions on their behalf, where they want to live, etc.”

This is also a great time to bring the younger generation into the conversation too, Melia says. “Teaching kids the basics of bill paying, money management, etc., just by talking out loud when we do financial things is beneficial to them. In the long run, it will make them financially literate.” Young adult children who join their parents in financial planning conversations could potentially become clients in the future as well.

Let’s explore some of the unique needs and challenges facing the sandwich generation, and how financial professionals can serve these clients.

Think long-term

It’s vital for financial professionals to help the sandwich generation set up an estate plan for their parents and themselves, says Jenna Lofton, CFP® and founder of the
"Advisors should ensure clients have a comprehensive estate plan in place, including wills, trusts, and powers of attorney."
blog “Advisors should ensure clients have a comprehensive estate plan in place, including wills, trusts, and powers of attorney. This helps protect their assets, provide for their loved ones, and ensure a smooth transition of wealth between generations,” she said.

It's also a good idea to explore long-term care coverage options, says Ryan McCarty, CFP®, of Castle Rock Investment Company. “As our clients' parents age, it's essential to consider the possibility of long-term care needs. Long-term care insurance can help provide financial support in the event of an extended illness or disability,” he said.

In addition, certain annuity products such as Global Atlantic’s ForeCare fixed annuity could provide alternative long-term care funding options for certain sandwich generation clients.

Refocus on retirement

It can be difficult for members of the sandwich generation to focus on their own needs, so it’s imperative that financial professionals ensure that they prioritize retirement savings. “The sandwich generation may be tempted to prioritize immediate financial needs over retirement savings, such as childcare expenses or eldercare costs,” says McCarty. “However, it's vital to prioritize retirement savings to ensure they are financially secure in their later years.”

Lofton agrees. “This may involve adjusting their savings rate and investment strategy, or exploring alternative sources of retirement income,” she said.

Certain annuity products can help provide alternative income streams as well as offer some stability and protection for the right clients.

Build a referral network — and trust

"'s vital to prioritize retirement savings to ensure they are financially secure in their later years.”

When working with clients in the sandwich generation, financial professionals should take a holistic view beyond financial needs, says Danielle Miura, CFP® and founder of Spark Financials, who specializes in helping caregivers manage their money. “A financial advisor who works with caregivers should have a toolbox of resources, like local senior nonprofits, Agency on Aging, estate attorneys, support groups, and care managers,” she said. Building a trusted referral network of fellow expert professionals prepares advisors to make qualified referrals when needed. This also further builds trust between advisors and clients.

Communicate clearly and often

Whatever challenges arise on this journey, communicate often and openly with sandwich generation client families, whether regarding goal setting, prioritization of expenses or other financial demands. “As the needs of the sandwich generation change over time, it's essential to be flexible and versatile in our financial planning strategies,” says McCarty. “By regularly reviewing and updating their financial plan, we can help them stay on track even as their circumstances change.”

It’s also important for sandwiched families to communicate with each other, not just the financial advisor. “Advisors should encourage clients to have open and honest conversations with their families about financial expectations and responsibilities,” Lofton says. “This helps ensure everyone is on the same page and reduces the likelihood of misunderstandings or resentment down the road.”

Notes McCarty, “Overall, the key to helping the sandwich generation navigate their unique financial challenges is to take a holistic approach that considers both short-term and long-term needs while prioritizing open communication and flexibility.”

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