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How We Live Now

Juggling kids, parents and busy careers, today’s Sandwich Generation is facing more complex financial pressures than their parents ever did. But they’re finding new ways to deal with the challenges—and still making time for what matters most.

SOMETIMES LIFE SEEMS to be pulling the Dholakia family in eight directions at once. If Sanjay, a busy executive, is not traveling outside the country, he makes weekly flights from his home in Bend, Oregon, to the headquarters of his marketing software company in San Mateo, California—not far from where his retired father still lives. His wife, Melissa, an educator and consultant to charter schools around the country, is also frequently on the move, working on the board of directors of one school she helped build in Oakland and another she recently helped found in San Francisco.

They'd have pretty full plates even if their lives were just about the two of them. But Sanjay and Melissa, both in their mid-forties, have two young children and also help manage the financial affairs of Sanjay's father. This complicated web of work and family responsibilities has turned their life into an ongoing logistical puzzle. "Juggling it all can be something of a challenge," says Sanjay, in his dryly understated way.

That could be the official mantra for the couple's entire generation. Born between 1965 and 1982, members of Generation X have been called the anonymous generation, forever overshadowed by the headline-grabbing baby boomers. Yet now Gen Xers find themselves thrust into the starring role of what could be the greatest family drama of their time: This generation often finds itself squeezed by demands from above (their parents) and below (their kids), even as they try to secure their own financial future—all with resources that often feel stretched thin.

While it was the boomers (of course!) who first defined "Sandwich Generation," Gen Xers, now in their mid-thirties to 50, are feeling those pressures on a scale their predecessors never knew. "They're at a time of life that is difficult for any generation," says Paul Taylor, co-author of a Pew Research Center study, Generation X: America's Neglected Middle Child. "But the sandwich phenomenon is really intensifying for Gen Xers." A number of dramatic shifts have converged to account for those increased pressures. Among them:

On the couch, Melissa and Sanjay Dholakia with their children. Top right: with Melissa at work, Sanjay handles afterschool pick-up; bottom right: he’s off on another business trip.


They're Late Starters.
Having married later, women these days are more than four times as likely to have a first child after 40 as their counterparts were 30 years ago, according to the National Center for Health Statistics. Add the longer life expectancies of their aging parents, and Gen Xers in their forties and fifties may find themselves weighing day-care options for young kids even as they look at eldercare for a 90-year-old parent.

Gen Xers may find themselves weighing day-care options for young kids even as they look at eldercare for a 90-year-old parent.

Meanwhile, the grown children of many Gen Xers are taking longer to become self-supporting and are more likely to return to the nest, says Neil Howe, an author and demographer, who is one of the nation's leading experts on generational demographics.

They Come From Smaller, More Fractured Families.
When it's time to help aging parents, Gen Xers—born during a period of declining birth rates in the United States—often have few siblings with whom to share responsibilities. And many of those parents are no longer together. The divorce rate among Americans 50 and older more than doubled from 1990 to 2010, and as older Americans get divorced, the children are on deck to help out. And families are more scattered geographically than they used to be, adding distance to the mix.

"My dad was one of 11 kids in his family—in ours, it was just my brother Sameer and me," says Sanjay. "It's wonderful in many ways because we've developed an incredibly close relationship. But it also means we are extra thoughtful about the way we—and the grandkids—get to spend time together with my dad and work on his behalf."

They're Juggling Work and Family.
Sanjay's and Melissa's mothers started working when their children were older and relatively self-sufficient. But it's more likely that both spouses in Gen X households work outside the home while the children are young—leaving them less time and energy for child and parent care.

Juggling Day-Care and College Costs
Finding savings when current demands clash with long-term goals

And They've Been Hurt by Volatile Markets.
It's not all demographics. Gen Xers lost almost twice as much of their wealth as baby boomers did during the financial crisis from 2007 to 2010, according to a report by the Urban Institute. "They've faced more debt, more disappointment and have been hit harder at more vulnerable times" than their parents, Howe says.

All of these shifts bring with them financial demands at a time when couples at the height of their earning power should be saving for their own retirements—after all, like their parents, Gen Xers need to prepare for longer post-retirement lives, too.


Caught by Surprise
Being in the middle of the sandwich can seem completely manageable—until suddenly real life intervenes. "I thought I was going to escape Sandwich Generation pressures," says Liz DeSole, 45, of Brooklyn, New York. But then her older child was diagnosed with autism and her father's health declined. Now there are bills for special schools and therapies and nights and weekends of caring for Dad (now 69) to relieve her mother.

Amid all of the family changes, Liz, a fashion designer, switched to part-time freelance work to give herself more time to deal with the pressures, so she and her family must find ways to make ends meet on one full-time salary instead of two. While acknowledging what she has given up to take on a larger role as a caregiver, she knows that, when it comes to being there for her family, she wouldn't have it any other way.

Good News: Advantage Gen X
DeSole's attitude speaks to this generation's critical advantage. In contrast to the "generation gap" the boomers made famous, there is "a tremendous amount of intergenerational goodwill" between Gen Xers and their parents and kids, says the Pew Center's Taylor, himself a boomer. That spirit of openness and cooperation will be crucial to opening the door to frank conversations on issues that families often prefer to avoid—from how much and how long Gen Xers can afford to support their children to who will pay if Mom and Dad run out of money or need long-term care.

"I would call this a resilient, do-it-yourself generation. We tend to view ourselves as solely responsible for our own outcomes." — Michael Liersch, head of behavioral finance, Merrill Lynch

This generation also has other things going for it—most notably an ingrained practicality, says Michael Liersch, head of Behavioral Finance at Merrill Lynch, who is also a member of Gen X. "I would call this a resilient, do-it-yourself generation. We tend to view ourselves as solely responsible for our own outcomes."

Knowing When to Ask for Help
Taking responsibility doesn't mean going it alone. Part of that can-do spirit, Liersch says, is a willingness to cooperate, collaborate on problems and find support wherever they can. One important source of guidance for the Dholakias is their Merrill Lynch Financial Advisor, Sonny Kothari of Brea, California, who helps with far more than just investment strategies. For instance, there's the way he has stepped in to help with the needs of Sanjay's father, Pratap.

"As Dad started to approach retirement, he asked my brother Sameer and me for help managing his finances as he focused on other things," Sanjay says. "We told him we would be happy to take on that job for him." Sameer is a business executive who lives in the Bay Area and is also a client of Kothari's. Now the two brothers discuss the particulars of their father's finances and make decisions together, based on Kothari's suggestions. Says Kothari, "I visit Pratap regularly to keep him up to date on his portfolio and the decisions his sons have made around his financial life."

Meanwhile, the Dholakias also want the best for their daughter Maya, 13, and son Kai, 6. In fact, that was the impetus for the family's recent move to Oregon. "We decided to do it because we wanted to focus on our kids, to raise them in the great outdoors outside the big city," Sanjay explains.

Sanjay and Melissa also want to plan for their children's futures and their education in a thoughtful way. Sanjay notes, "When my son, Kai, graduates from college, I will be over 60. When my dad was that age, I was 35 years old, established in my career, family and well on my way. So Melissa and I will have different things to think about as we look to helping our kids and our grandkids."

Squeezed From Below
When both spouses work, striking a livable work-life balance can be challenging in the extreme. And often it may seem as if most of that second income goes to pay for day care or after-school care—which can easily consume 15% or more of a couple's income for a single child, according to the national organization Child Care Aware.

And then there's the cost of college to think about. As tuition at four-year public or private colleges rises ever higher, the advice to start saving early has never been more crucial, says Richard J. Polimeni, director of the Education Savings Programs at Bank of America Merrill Lynch. "Managing to make small, regular deposits into a tax-advantaged savings plan such as a 529 is far preferable to facing a gigantic bill later," adds Polimeni, who is a Gen Xer raising two small children. "Even if I can only put aside a portion of what will be needed, that's money my child or I won't have to borrow down the road."

One way to ease the pressure on your monthly budget—and to have a little more left over for savings—is to ask teenage children to cover some of their own expenses. Liersch says that these days parents at all levels of wealth seem increasingly willing to require their kids to pay for their own wheels, hold summer jobs, pay a share of college costs or chip in rent if they move back home. "They want their kids to understand the meaning of money."

Caring for Your Parents—
From a Distance

Three ways to bridge the miles as you help aging parents

Squeezed From Above
The older side of the sandwich may present even greater complexities. While Gen Xers aren't the first generation to feel responsible for helping the parents who raised them, they will undoubtedly do so for a longer period than any generation in history. Thirty more years of life (compared with people alive in 1900) translates into years or even decades of assisting aging parents with everything from daily living to managing their finances—and, in many cases, help in covering their financial needs.

You need to understand your capacity to help your parents and then assess what they actually need, says Cynthia Hutchins, director of Financial Gerontology at Bank of America Merrill Lynch. That includes getting a clear picture of their assets. In some cases, adds Hutchins, you may need to help your parents find a balance between legitimate fears of out-living their savings and the risk of being so cautious that they forget to enjoy life. "Dad wanted to really enjoy his retirement, traveling and spending time with the grandchildren," says Sanjay. "Sonny and his team have helped us see that he can do that."

Of course, there is one very good reason that parents may want to preserve their savings—there's a high probability that one or both of them will need extended nursing care at home or in a residential facility. Nearly 70% of Americans over 65 will need long-term care at some point in their lives, according to the U.S. Administration on Aging, and for one in five, that care will last for more than five years. An aging parent who lacks insurance or savings to pay for long-term care may be able to leverage the value of what is likely his or her largest financial asset—the family home. "If push comes to shove, a single parent who needs to go into an assisted living facility can sell the house and use the proceeds to help pay for it," says David Laster, head of Retirement Strategies at Bank of America Merrill Lynch.

Sharing the Caregiving
In addition to money to pay for health care or other expenses, older parents may have other needs—and these days, when a typical family may be smaller and more widely dispersed geographically, it's easy for the sibling who lives closest to the parents to inherit the bulk of those responsibilities.

To address such situations, "perhaps those who live far away can help by hiring others to help out," says Hutchins, who suggests convening a family meeting early on to discuss and settle such issues openly. One option could be to hire a geriatric-care manager to shoulder some daily tasks. These professionals can help with everything from attending doctor appointments to sorting through the requirements of receiving federal and state government assistance to planning social activities.

Setting Money Boundaries
A written statement can clarify what you can (and can't) do to help your parents and your kids

Don't Neglect Your Own Needs
Not having enough to live on in retirement is shaping up as a defining concern for members of Generation X—who, like their parents, need to prepare for longer post-retirement lives. It's critical for you to consider what you're really in a position to do for others, urges Laster. If you can establish clear boundaries between what you wish you could do and what you are able to do, that could help you avoid surprises and recriminations later on.

A primary danger for those in the middle of the sandwich is to sacrifice their own retirement planning, Laster says. While traditional notions about how, when and even whether to stop work are changing quickly, you still need to set aside as much as you can for whatever may lie ahead.

That's why, even when money gets tight, the DeSoles of Brooklyn stay committed to putting the maximum allowable amount into her husband's company's retirement plan, Liz says. If you can't contribute the maximum, try to reach 10% to 15% of your income, and at least be sure to put away enough to earn any company match, Laster suggests. While few experts believe that Social Security will disappear, it's likely that the age at which people can begin taking distributions will continue to go up.

A New Normal
As longevity increases, being stuck in the middle of the sandwich is developing into a new normal, with one generation after the other inheriting the mantle and putting its own spin on the solutions, says Deborah Carr, a professor at Rutgers University and author of Worried Sick. Through it all, Carr says, one constant is the need for members of the generation currently in the middle to see to their own needs—whether that means looking after their long-term financial future or simply staying in good physical shape and finding time for recreation and fun.

And don't forget to regularly count your blessings. "Things are so hectic and busy, it feels as though our lives are held together with bubble gum and paper clips, and a change in schedules or a good stiff breeze could blow it all apart," Sanjay says. "That's why we're grateful that Sonny does a lot of thinking about our future, and we trust him implicitly. He has made it possible for Melissa and me to spend more time focusing on our work and our family." And knowing it's all about building a future for those he loves, Sanjay adds, "makes all of the complexities worth it, for sure."

Watch how another family handles the "Sandwich Generation Balancing Act" in this video.

Transcript of Video

3 Questions to Ask Your Advisor

  1. How can we balance our children's and parents' needs with our long-term goals?
  2. How much should we be saving toward our own retirement?
  3. Can you help organize a meeting to discuss finances with our parents and grown children?

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