Supporting the Sandwich Generation on their road to retirement readiness

About one quarter of U.S. adults are part of a special demographic called the Sandwich Generation which touches all races, ethnicities, genders, income brackets and levels of education. Now largely in their 40s and 50s, many of these sandwiched adults are balancing careers, managing personal financial responsibilities and tending multiple other relationships. At the same time, they’re caring for an aging parent and raising at least one child under 18 or providing financial support to at least one of their adult children.

For these caregivers, it’s a juggling act that can present challenges, such as emotional and physical stress, lack of time for themselves and financial strain. Adding to these challenges, many sandwiched caregivers in Generation X are part of the “401(k) generation” — the first generation less likely to have a pension, so saving for retirement mostly falls on their shoulders.

Financial stressors for the Sandwich Generation

Athene surveyed 409 Americans ages 40 to 59 who financially support and have at least one adult child over 18 and parents or other relatives living in the home to better understand what the Sandwich Generation faces. What we found is caring for multiple generations can be rewarding, but also create financial stress due to:

• Lost income – Sandwich Generation caregivers are more likely than other caregivers to work for pay — 59 percent work full time. Given that, these individuals have lost more than $10,000 of potential income because they’ve had to cut back hours, take on higher expenses or leave a job to manage their caregiving responsibilities.
• ?More debt – Over time, it’s typical to make larger purchases and take on more debt.Considering student loans, mortgages, car loans, and credit card balances, some sandwiched adults may be carrying more debt than older generations.
• ?Multi-generational financial support – 86 percent of respondents financially support their parents with daily expenses, 72 percent with their housing, and 76 percent financially support their adult child(ren).
• Young children – Many sandwiched caregivers still have kids of all ages at home, and those costs can add up quickly. According to Care.com’s 2023 Cost of Care Report, child care costs have continued rising for the tenth consecutive year.???????????

Over half of parents surveyed plan to spend $18,000+ per child on childcare in 2023.

• Boomerang kids – With high housing costs, high student loan debt and lower wages for adult children without a college degree, over 30 percent of 25- to 29-year-olds live in a multi-generational household. Parents of these young adults are helping foot their bills.

Their retirement readiness

Even though many of today’s 40- and 50-year-olds are in their peak earning years, supporting multiple generations can take a financial toll and create a multitude of bumps along their road to retirement readiness.

For instance, nearly half (47 percent) of Athene’s Sandwich Generation survey respondents are putting off retirement so they can financially help an aging family member(s) or adult child(ren). And 46 percent of the survey respondents are using their retirement assets to support those family members.

How financial professionals can help

By 2025, many of the older Sandwich Generation (the first-born Gen Xers) turn 60. This generation has its own ideas about what retirement means, whether it’s working longer, maintaining an active lifestyle or staying socially connected. According to Athene’s survey, sandwiched adults’ top three retirement concerns are maintaining their standard of living, not having enough assets to retire and having to rely on their adult children for financial support.

The good news is financial professionals can assist this generation of clients. One of the more important ways is by keeping them focused on their own financial goals, especially retirement savings. They can also help:

• reprioritize a client’s financial demands and goals
• encourage clients to save consistently, even if it’s small sums right now
• remind them how important it is to contribute at least enough to receive
• their employer’s full matching 401(k) plan contributions
• talk to adult child(ren) about contributing to the family budget or aging
• parents about taxes and estate planning

Make sure clients aren’t leaving money on the table with their 401(k) plan.

From financial stress to financial security

Sandwiched adults make up 23 percent of the U.S. population. With millions of people caring for parents and children in different life stages and levels of activity, the Sandwich Generation’s needs may vary. But according to Athene’s survey, 70 percent of respondents who have an annuity say there’s been no negative impact to their retirement readiness. Financial professionals who understand the financial and emotional stress facing this demographic could help ease client concerns by discussing how different annuity options help:

• maximize growth potential and protection for retirement assets
• provide retirement income
• catch up on retirement savings to support their goals

To assist financial professionals and their sandwiched clients navigate this challenging stage of life, Athene created a collection of resources in the Sandwich Generation Toolkit. There is a short quiz to help identify a client’s individual needs, conversation guides to facilitate conversations with their children and parents, and other resources to help them achieve financial security for retirement.