Balancing the needs of aging parents and growing children is a reality for millions of Americans in what’s known as the “sandwich generation.” If you’re supporting both generations, you’re likely juggling emotional responsibilities and financial trade-offs—while still trying to stay on track for your own retirement. Without a clear plan, it’s easy to put everyone else’s needs first, often at a steep cost to your future.
Here are five planning considerations that may help you manage the strain of multigenerational caregiving while protecting your long-term financial well-being.
1.) Understand the Scope of Your Commitments
Start by taking inventory of the support you’re providing. Are you contributing to a child’s college tuition? Covering housing or medical costs for a parent? Helping with everyday expenses like groceries, transportation, or childcare for grandchildren?
Getting a clear picture of your financial involvement can help you set priorities and build a plan that accounts for extended obligations—while reducing the chance of unexpected strain.
2.) Protect Your Own Financial Future First
It’s tempting to give more than you can realistically afford—especially when it comes to family. But drawing from retirement savings or delaying your own goals to help others can have long-term consequences.
Before making any large financial commitment, ask yourself: Could this impact my ability to retire on time? Are there other ways I can offer support without compromising my future? Consider strategies like maximizing your retirement contributions and using employer matches to stay on course.
3.) Set Boundaries and Communicate Openly
Supporting multiple generations requires ongoing communication—and sometimes tough conversations. Be honest about what you can reasonably provide, and clearly communicate any limits to your children, parents, or siblings. Transparency can help prevent misunderstandings and encourage shared responsibility.
If you’re coordinating care for a parent with siblings, it may help to formalize roles or rotate responsibilities to reduce the risk of burnout.
4.) Explore Cost-Sharing and Tax-Efficient Strategies
Multigenerational care may offer planning opportunities, especially when you’re thoughtful about cost-sharing and tax strategies. Here are a few ideas to consider:
529 Savings Plans
If you're helping cover education expenses for a child or grandchild, a 529 savings plan may be worth exploring. These tax-advantaged savings accounts can be used for qualified education costs and may offer federal tax benefits.Claiming a Parent as a Dependent
If you're providing substantial financial support to an aging parent, you may be able to claim them as a dependent on your tax return. Eligibility depends on factors like income thresholds and the amount of support provided.Dependent Care Credit
If you’re covering care expenses for a parent while working or looking for work, you might qualify for the Dependent Care Credit. This tax credit can help offset a portion of eligible expenses—such as adult day care or in-home care—based on your income and situation.Evaluate Housing and Relocation Options
Depending on your circumstances, relocation may help ease some of the financial and logistical pressures of multigenerational caregiving. You might consider moving a parent closer to reduce travel time and oversight costs—or relocating yourself to a lower-cost area to make your retirement and caregiving budget go further. Downsizing, co-housing, or exploring multigenerational living arrangements are also strategies you may want to explore as part of a broader financial plan.Long-Term Care Insurance
If you're concerned about future care costs—either for yourself or a parent—long-term care insurance may help cover services like in-home care, assisted living, or skilled nursing. Having coverage in place could reduce future financial and emotional strain on your family.Irrevocable Trusts
As part of an estate or eldercare plan, you may want to explore whether an irrevocable trust is appropriate. When properly structured, these trusts can help protect assets from being counted toward Medicaid eligibility or future estate taxes and may help ensure those assets are distributed according to your wishes.
5.) Don’t Go It Alone—Build Your Support Team
Multigenerational planning involves emotional decisions, legal considerations, and financial trade-offs. You don’t have to figure it out alone. A financial advisor can help you evaluate your options, weigh competing priorities, and develop a strategy that aligns with your family and retirement goals.
Depending on your situation, it may also be helpful to work with legal or tax professionals—especially when it comes to powers of attorney, estate planning documents, or navigating eldercare-related rules and benefits.
Plan for Them. Plan for You.
Supporting multiple generations is an act of love—but it shouldn’t come at the expense of your own security. With the right planning, you can help the people you care about while protecting your future.
Everyone’s financial situation is different. The strategies mentioned above may or may not be appropriate depending on your personal circumstances. If you’re navigating the demands of multigenerational care, contact Aspire Planning Associates at (925) 938-2023 to schedule a consultation. We’ll help you explore your options and build a plan that supports your family—and your future.
