Caring for parents and children creates unique retirement planning challenges for Gen X

If you’re a member of Generation X (ages 44-59), you've weathered economic uncertainty, adapted to technological advancements, and developed a self-reliant approach to life’s ups and downs. Now, as part of the “sandwich generation,” you may be facing a new challenge: looking after your aging parents and supporting your children while trying to secure your own financial future. 

If you're feeling squeezed by these competing demands, you're not alone – and help is available. Working with a financial professional can be invaluable when it comes to planning ahead to protect your parents' well-being, support your children's future, and make sure your own retirement security isn't sacrificed along the way.

The financial reality of modern caregiving

Recent findings from our 2024 Advisor Authority Gen-X survey, powered by the Nationwide Retirement Institute^®, revealed just how common your situation is: 56% of those surveyed provide financial support to either their parents or children. This responsibility comes with significant financial strain, with 21% of caregivers reporting substantial debt. Many are making difficult sacrifices – 24% are accumulating credit card debt, while 35% are cutting back on non-essential expenses. Perhaps most concerning, 10% struggle to cover basic household expenses like groceries and utilities.

The burden of caring for older and younger generations is also impacting Gen X retirement plans.  A number of Gen Xers are struggling to save for retirement, with many forced to either pause or reduce their retirement contributions. Some are even drawing from their existing retirement accounts to manage the financial pressures of supporting both their parents and children, potentially compromising their long-term financial security.

Find balance: Partner with a financial professional

While your commitment to being a caregiver may be long term, it doesn't have to come at the expense of your own financial security. A financial professional can help you develop a personalized plan that addresses caregiving needs and long-term financial goals for your parents, your children, and yourself.

Planning for parental care

Caring for aging parents comes with a host of complexities. A financial professional can help you prepare for various scenarios by:

• Evaluating long-term care insurance options and assessing current and future potential needs and costs – more than a third (36%) of financial professionals surveyed suggest leveraging long term care insurance for aging parents.
• Establishing trusts or Family Limited Partnerships (FLPs).
• Considering life insurance and annuity strategies to generate predictable income streams to cover future expenses.
• Helping to facilitate challenging family conversations around future care expectations and develop strategies that minimize financial strain on caregivers.

On the other hand, it’s important to take steps to plan for your children’s future needs by:

• Setting up 529 plans or other college savings plans for education expenses, as well as trusts to help preserve wealth across generations.
• Implementing life insurance policies and investment strategies that grow with their needs.
• Creating contingency plans and emergency funds to ensure your children's financial security. This may include special needs planning, guardianship arrangements, and management of inheritances, for example. 

 While caring for your loved ones is obviously a top priority, don’t forget about your own financial well-being. Keep the following in mind:

• Develop a realistic retirement planning strategy that fits your circumstances, and work with a financial professional to stay on track in achieving that goal Prioritize saving for retirement over non-essential expenses, such as dining out or online subscription services. According to our survey, 35% of financial professionals recommend this strategy. 
• Invest in a way that aligns with your goals while protecting your assets. High inflation has prompted 60% of Gen X investors surveyed to adjust their portfolios, but that may not be the best move for you when it comes to achieving your retirement goals.
• Maintain your health and life insurance coverage and consider investment strategies that can help generate a lifetime income stream.

Key investing fundamentals to watch

The demands of caring for both older and younger family members can feel overwhelming, but you don't have to address these challenges alone. A financial professional can help you to: develop debt management plans, create smart investment strategies, build financial resilience while managing your caretaking responsibilities, and prepare for a long, fulfilling retirement.

By partnering with a financial professional, you can:

• Manage current financial strain while maintaining a focus on building your retirement savings.
• Balance competing priorities across older and younger generations.
• Develop strategies that make sense for your current situation and long-term goals.
• Help build financial security for yourself while supporting your loved ones.

Taking care of others doesn't have to mean sacrificing your financial goals or the retirement you envision. With proper planning and professional guidance, you can successfully support older and younger generations while protecting your financial well-being and retirement aspirations.

Sources and Disclaimers

Survey source: Advisor Authority Gen X survey, powered by Nationwide Retirement Institute^®, September 2024.

Survey methodology: The Harris Poll, on behalf of Nationwide, conducted an online survey in the U. S. among 610 advisors and financial professionals and 2,496 investors ages 18+ with investable assets (IA) of $10K+, August 26-September 13, 2024. Among the investors, there were 319 Gen Z (18-27), 724 Millennials (28-43), 635 Gen X (44-59), and 741 Baby Boomers (60-78).

Respondents for this survey were selected from among those who have agreed to participate in our surveys. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data for advisors is accurate to within + 4.0 percentage points and for investors the sample data is accurate to within + 2.5 percentage points using a 95% confidence level. This credible interval will be wider among subsets of the surveyed populations of interest. The sample data for the subset of pre-retiree investors age 55-65 who are not retired is accurate to within + 6.7 percentage points using a 95% confidence level.