Financial planning for one is daunting enough, but planning for three generations of people can be downright overwhelming.
Yet, it’s exactly what tens of millions of “sandwich generation” Americans who simultaneously take care of kids and parents need to think about, financial experts said. Otherwise, they risk – as many have already experienced – being financially drained as well as emotionally and physically exhausted.
Last year, a survey of 1,024 Americans ages 40 to 59 by retirement services company Athene showed almost 75% of respondents in the sandwich generation had adjusted their retirement goals to support their adult children and aging relatives. They reduced expenses, delayed retirement or dipped into their retirement savings while others planned not to retire at all, it said.
“It’s a very, very challenging environment – paying for kids or adult kids and aging parents,” said Miklos Ringbauer, a certified public accountant and founder of MiklosCPA Inc. Caring for people day to day without a plan, “you hurt yourself, your own future and your own wealth.”
As usual, the best time to design a plan is early, before an event like a parent falling gravely ill happens, experts said. Early planning always offers people more tools and more flexibility to protect you and loved ones.
A major area of focus should be plans for long-term care, experts said. Approximately 70% of people turning age 65 are expected to need some form of long-term care, according to the U.S. Department of Health and Human Services (HHS). Long-term care encompasses a wide range of care including assistance with daily tasks to more complex medical care either at home, in a facility setting like a nursing home, or in a community-based setting like an assisted-living facility.
Traditional health insurance and Medicare typically don’t cover long-term care, which can be expensive. The median cost of adult daycare five days a week in 2025 was $24,700 annually, while home non-medical caregivers ran about $80,080, according to planning company CareScout’s Cost of Care Survey. A semi-private nursing home room costs $114,975 annually and a private room, $129,575, CareScout said.
Wealthy people may afford to pay or buy long-term care insurance, which can be expensive, advisers said. Long-term care insurance premiums can rise over the years, and if the insurance isn’t used, money can’t be recovered, they said.
Others may consider a hybrid life insurance policy, said Rob Burnette, investment advisor representative and professional tax preparer at Outlook Financial Center. These fixed-cost policies ensure a payout either as care benefits or a death benefit to beneficiaries, so no money is left on the table if you end up lucky and never need care, he said.
Government programs are also an option, said Joseph Fresard, attorney at elder law specialists Simasko Law.
“One of the biggest mistakes people make is not taking advantage of public benefits a parent may be eligible for,” he said.
Veterans may qualify for long-term care or people can plan to use Medicaid, Fresard said. Both have income restrictions and other requirements so families should examine those and begin preparing to qualify ahead of time.
Medicaid has a five-year look back period so families can’t just give away assets and qualify for Medicaid. They need to plan and begin legally spending down their parent’s excess assets by paying for things such as home repairs, accessibility modifications, prepaid burial arrangements, and unreimbursed medical expenses, advisers said.
Families can also create irrevocable trusts to remove countable assets towards Medicaid qualification, but remember, irrevocable trusts are usually unchangeable.
“You can put your parent’s house in an irrevocable trust and then sell it and use the money to pay for long-term care, but the money has to stay in the trust to use,” Fresard said.
All of these options could help keep most of your parent’s expenses out of your budget so you can focus on yourself and your kids, experts said.
If a parent unexpectedly is hospitalized, suddenly needs long-term care and you haven’t planned, don’t panic, advisers said.
There may be fewer options, but “it’s not too late to plan,” Ringbauer said.
“Stabilize your own finances first,” he said. “It’s like putting on your oxygen mask first on an airplane, before you help others.”
The least you should do for yourself is contribute enough to a company 401(k) plan to get the company match, and then turn to taking care of others, advisers said.
If there are siblings, talk to them about a plan and discuss what each person can contribute to your parent’s expenses, Ringbauer said.
One place to look for help is in your company’s benefit plan. “A closer look at how workplace benefits can help ease pressure is a solid place to start,” said Kate Winget, chief revenue officer at Morgan Stanley at Work. “Benefits like flexible work arrangements, leave policies, dependent care benefits, and financial wellness tools can become game changers, and many don’t even realize these benefits were already available to them.”
If you must pay, try to do it in a tax-efficient way to save money, Ringbauer said.
If a parent needs care and is claimed as a dependent on your tax return, you may be able to use your work’s pre-tax dollars from a dependent care flexible spending account for adult day care or home caregiver as well as for your kid’s care so you can work, he said. For medical expenses, pay with pre-tax money from your health savings account.
Tax credits for your parent and child also may be available, including:
Make sure you keep detailed records of all your financial support for your taxes.
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.