Caught in the middle

Managing your finances while caring for others requires setting firm boundaries

If the term “Sandwich Generation” makes you feel hungry, it shouldn’t. It should make you feel squeezed, or “sandwiched” in a tough situation.

The Sandwich Generation is made up of middle-aged adults who are taking care of a child and also have a parent over age 65.

They’re feeling the pressure as they take care of both generations, physically, emotionally and financially. A 2013 study by the Pew Research Center found almost half of adults in their 40s and 50s today belong to the Sandwich Generation, which isn’t a generation in terms of birth years, but rather a potentially challenging, increasingly common stage of life.

If you’re a card-carrying member of the Sandwich Generation, how do you care for your finances while also caring for others?

Talk it over

Step one is having an honest and open discussion. More than half of adult children say they haven’t had a detailed conversation with their parents about finances, according to a study by Fidelity.

Talk to your parents early, before they need financial help. Ask them where they keep a copy of their estate plan, how they plan to handle long-term care and what happens when one spouse outlives the other.

You may learn some important information, or you may give them the kick-start they need to take care of these steps.

Set ground rules

Meanwhile, you should also discuss your expectations with your children once they’ve grown up and graduated from college.

I recommend setting boundaries before writing a big check or letting a grown child move back home.

You should agree upon how long your children can live with you and how much they’ll pay for expenses such as rent or groceries.

Don’t feel obligated to put your own retirement in jeopardy to help your adult children financially. You can convey the message pragmatically by telling your kids you don’t want to be a burden on them someday.

Use the right accounts

In addition to a traditional savings account, be sure to utilize accounts that will help you reach your goals.

  • Parents with young children can start a 529 plan to save for college expenses. The money saved won’t be taxed as long as it’s used to pay for approved educational expenses, such as tuition, fees, books, supplies and room and board.
  • A Flexible Spending Account (FSA) can be used to cover health-care costs for you, your spouse, your children and your parents if they’re declared as your dependents. The money you contribute is pre-tax and can be used to pay for qualified medical costs. Note: FSA funds typically must be used by the end of the year.
  • Don’t put off saving for your own retirement in a 401(k), IRA or Roth IRA.

Work as a team

Many times, taking care of elderly parents is left to one person.

Get help from your siblings or other family members.

It happens all too often that members of the Sandwich Generation are forced to leave their jobs to take care of parents, leaving behind not just a salary, but also 401(k) contributions and future advancement within the company.

Getting help from other family members may allow the primary caregivers to stay on the job.

Consult a professional

If you’re struggling in any of these areas, it may be time to bring in a third party. Meet with a financial advisor who works closely with a team of professionals, including an elder law attorney and a tax professional.

Don’t be a martyr. Don’t derail your own retirement for your parents or your kids.

Matt Gulbransen is the President of Callahan Financial Planning in Woodbury. Learn more at