Eaten by Anxiety: The Sandwich Generation

They’re called the “Sandwich Generation,” but that moniker has nothing to do with the wide variety of savory fillings that Americans slather with mayonnaise, garnish with lettuce and tomato, and stuff between two thick slices of bread. Instead, the term “sandwich” refers to the generation shoehorned between the competing demands of raising children and caring for aging relatives, even as they attempt to save for their own retirement.

It’s a dilemma shared by at least 13 percent of Americans ages 41 to 59, according to a recent study by the Pew Charitable Trust. On its surface, being “sandwiched” sounds like an almost impossible situation. Christopher Portner, a financial planner for PSA Financial, contends such competing financial pressures can be handled with smart planning and, in some cases, a few sacrifices. “In an ideal world, people begin saving for both retirement and their children’s education when they are first married and just starting out, so it becomes a habit. Even if they only put aside $25 a month, it adds up and they find themselves in a much better situation in mid-life,” Portner says. “Unfortunately, that’s not the situation for many people. So we have to approach the challenge realistically, which means working with a financial planner to help them get an accurate ‘snapshot’ of where they are financially at this place and time, as opposed to where they would like to be—which is able to put aside funds for retirement and college simultaneously, as well as, if necessary, caring for their parents.”
 
Portner begins this process by combing his clients’ financial records for cash flow and tax errors that could be costing them money that they otherwise could channel into retirement and college funds. He also suggests that his clients explore other methods of paring down expenses— some of which may involve a bit of  self-denial. “Together, we examine their expenses, and we look at such things as whether they have, for instance, a big car payment on a luxury car, when a used Honda would get them there just as well on much less money,” he says.

Portner also sees clients who are “suffocating” under mortgages that are financing “too much house” and families who routinely spend $160 a month on cable, but complain that they “can’t save a cent” toward their own retirement or their children’s future college tuition. “We talk about setting realistic priorities that not only meet the family’s needs now, but also in the future,” he says. “I might suggest that they cancel the cable and put that money into retirement and college funds. As I said before, this can really add up over the years.”

But Portner cautions individuals and families in the “sandwich” situation not to be so overzealous about cutting expenses that they eliminate essentials, such as life insurance. “Don’t be ‘penny-wise and pound foolish,’” Portner advises. “When you think about it, individuals in this situation have two sets of people depending on them: their children, and their parents. It’s a case where you need more insurance, not less. This is not the area where you can do without.” Even with planning and cost-cutting, some families simply are unable to save for retirement and college simultaneously. What then?

“Then it’s time for what I call ‘Reality 101,’ which is basically coming to terms with the reality that you just may not be able to do it all,” he says. “If it’s a situation where parents have to choose between saving for their own retirement and putting away money for college, then I tell them to understand that there is no financial aid for retirement. Retirement just might come and leave them without the ability to generate income any longer, which is why it is so important to save intelligently now.”

College, on the other hand, can be financed in a variety of ways, from loans to scholarships and grants.  “I remind parents that if they sacrifice their financial stability for their children’s education goals, they are just setting their children up to be the next sandwich generation,” says Porter. “And that’s not something that they want to happen.”

                 
Chris Portner, CFP

T: 443-798-7374
Em: cportner@psafinancial.com

Area of Specialty: 
Individual investments, portfolio management, retirement and estate planning and wealth management.  (More)