Sandwich Squeeze: Juggling Retirement Dreams and Family Duties in Modern America

Sandwich Squeeze: Juggling Retirement Dreams and Family Duties in Modern America

As a news reporter, I’m here to shed light on a growing trend affecting millions of Americans: the “sandwich generation” struggle. These hardworking individuals find themselves caught between caring for aging parents and raising their own children, all while trying to save for retirement. It’s a balancing act that’s becoming increasingly difficult in today’s economy.

Take the Gomez family of Dracut, Massachusetts. Alicia and Chu Gomez, both in their late 50s, are prime examples of this “sandwich” dilemma. Their home houses seven family members across three generations. “It’s crazy,” Alicia told us. “We’re raising my niece and nephew. My mother lives with us and my sister lives with us.”

This setup isn’t unique. The U.S. Census Bureau reports about five million households have similar arrangements. While it can bring families closer, it often throws a wrench in retirement plans.

Chu Gomez admitted, “We were thinking 62, we can retire at 62, and still be young. And the other day she says, ‘You’re going to work till 70, right?’ I’m like, ‘I guess so.'”

Labor economist Teresa Ghilarducci warns that people in their 50s need to save as much as possible. “In your 50s, you may be pressured to help your adult children,” she said. “You may be pressured to even help your older parents. But don’t sacrifice your own retirement savings.”

The Gomezes are trying to save, but they’re also deep in debt. House payments, car loans, and college expenses for their daughters add up to over $500,000. Chu doesn’t expect to pay off those college loans until he’s 71.

While the couple has some savings, it’s not enough. Alicia worries, “God forbid, if one of us gets sick or we are laid off, what will that do to us financially?”

Their concerns aren’t unfounded. Both Alicia and Chu lost their jobs in their 50s. Ghilarducci notes, “People in their 50s have a really high chance of losing their career job. So, watch your back, keep your job.”

When Chu was out of work for six months during the pandemic, he missed out on $13,000 in 401k contributions. That could have grown to about $40,000 by retirement, potentially covering some health care costs. On average, a 65-year-old retiree should expect to spend around $165,000 on health care throughout retirement, according to Fidelity.

The pressure never lets up for families like the Gomezes. “We didn’t know we were going to have to care for so many family members,” Alicia said. “So, the unexpected…was a wake up call…for us.”

This “sandwich squeeze” is affecting more than just finances. A New York Life Wealth survey found that these caregivers spend about 50 hours a week looking after both children and aging parents. That’s practically a second full-time job!

The emotional and financial toll is significant. Many in this group report higher levels of credit card debt compared to the general population. With inflation still a concern, these peak earners are feeling the pinch from all sides.

So, what can be done? Experts suggest having honest conversations about how long financial assistance for relatives will last. It might help to temporarily reduce retirement contributions to tackle high-interest debt, then boost savings later.

For those caring for elderly parents, there are some options to explore. Home and community-based services Medicaid waivers can provide financial compensation for in-home care. It’s worth checking if your state offers this program.

Tax benefits are another avenue. You might be able to claim an elderly parent as a dependent, potentially saving up to $3,000 in tax credits per person cared for. There are specific income and living arrangement requirements, so be sure to check the latest IRS guidelines.

Don’t forget to shop smart for care-related items. Look for deals on medical supplies and consider virtual doctor appointments when possible to save on transportation costs.

The “sandwich generation” faces unique challenges, but with careful planning and smart financial moves, it’s possible to care for family while still saving for the future. It’s a tough balance, but one that millions of Americans are learning to master every day.

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