Building Wealth | Sandwich Generation Survival Strategies & High-Earner Financial Pitfalls

Have you ever felt "sandwiched" between caring for your children and supporting aging parents? If so, you're not alone. This edition of Building Wealth is full of tips for discussing family finances and ways to maintain self-care even when feeling squished. This month, we also cover the challenges high earners navigate while providing some pointers on how to balance lifestyle choices with long-term wealth-building goals. Let's go!

Caught In The Middle

If you're raising children while also caring for aging parents, you've joined the "sandwich generation"—a demographic caught between the responsibilities of supporting multiple generations simultaneously. With over 53 million Americans serving as family caregivers, this dual role is common, especially for those in their peak earning years.¹

Who Is Part of the Sandwich Generation?

According to recent studies, more than half of Americans in their 40s are sandwiched between these dual caregiving responsibilities. This phenomenon becomes more prevalent as people live longer and have children later in life.²

The Financial Squeeze

There are a number of financial implications when caring for multiple generations:

• Rising childcare costs: The proportion of U.S. families allocating 20 percent or more of their yearly household income to childcare increased from 51 percent in 2021 to 60 percent in 2022.³
• Increasing elder care expenses: The median annual cost for a home health aide rose by 10 percent, reaching $75,500 in 2024.³
• Education funding: The average college tuition is projected to double in the next 10 years.³
• Retirement concerns: 42 percent of sandwich generation caregivers have redefined their approach to retirement.¹

For many, the financial issues are compounded by time management challenges and emotional stress as they navigate complex family dynamics while trying to maintain their well-being and career trajectory.

Strategies To Ease The Pressure

Open Family Conversations About Finances

Begin by having candid discussions with both your parents and children about financial expectations and limitations. These conversations, while potentially difficult, establish clarity and shared understanding. Consider involving financial professionals who can provide guidance on issues like education, retirement, and healthcare arrangements.⁵

Prioritize Your Financial Security

While it may seem difficult at times, your financial future should remain a priority. Similar to the airplane oxygen mask instruction to secure your mask before helping others, managing your personal finances can ultimately benefit everyone who depends on you.

• Focus on retirement accounts
• Build an emergency fund for unexpected expenses
• Review and update your insurance coverage⁵

Explore Available Resources

Several programs and resources exist to help sandwich generation caregivers:

• Medicare and Medicaid: Review what healthcare expenses might be covered for aging parents
• Employer benefits: Many companies offer Employee Assistance Programs that include caregiving resources, flexible work arrangements, or dependent care accounts
• Community services: Area Agencies on Aging, meal delivery programs, and adult day care can provide support and respite⁴

Practice Self-Care

According to health professionals, caring for yourself is a key part of how you care for your family. Prioritize self-care by:

• Making time for physical activity and proper rest
• Establishing boundaries to preserve your mental health
• Connecting with others in similar situations through support groups
• Seeking professional help when feeling overwhelmed¹

By balancing your own needs with those of your loved ones, you're not just surviving this challenging phase—you're creating a foundation of stability that may benefit your entire family. And while it may not always feel like it at the moment, your efforts to support multiple generations are creating a powerful legacy of care.

The Top Financial Missteps High Earners Make

High earners face unique financial challenges that can prevent them from building true wealth despite their income. For those in the "High Earner, Not Rich Yet" (HENRY) category—typically urban professionals in their 30s making six-figure salaries—managing common financial pitfalls can help with long-term prosperity.⁶

Lifestyle Inflation: The Silent Wealth Killer

Many high earners allow their spending to increase proportionally with their income, a phenomenon known as lifestyle inflation.⁷

In one striking example from a CNBC report, a couple was shocked to discover they had spent $1.4 million on jewelry over 18 months. After examining their spending patterns, they adjusted their priorities the following year.⁷

Smaller purchases can also undermine financial progress when they accumulate over time. When analyzed collectively, dining out, travel, and gift expenditures often surprise people.⁷

Home and Education Decisions: Emotional vs. Rational

Big-ticket purchases, such as a vacation home or exotic car, can become expensive ongoing financial obligations that can sometimes be budget busters.

For example, with a vacation home, here are some top considerations:

Money Moves: Will you buy it outright or take out a mortgage? Are you interested in renting it when you’re not there? What’s the impact on your cash flow?

How Much Time Will You Spend There?¹ If you only intend to spend a few weeks a year there, you’re likely better off renting.

Will a Second Home Increase Your Stress? Like your primary residence, you’ll have to deal with utilities, maintenance, repairs, property taxes, homeowners’ insurance, and other considerations.

The Balancing Act: Strategic Spending Vs. Saving

Not all discretionary spending is problematic. It can be helpful to follow some broad guidelines so you have a better idea of when you are pushing certain limits. For example, have you ever heard of the 50/30/20 Rule? It suggests allocating 50 percent of your income to essentials (rent, groceries), 30 percent to wants (entertainment), and 20 percent to investments. It’s only a high-level rule, but it can offer some insights if you find your spending is much different.

Balancing Uncertainty

According to Business Insider, many high earners save 40-70 percent of their income because they are concerned about economic uncertainty and future expenses like childcare or supporting aging parents.⁶

Working with a financial professional can help address that uncertainty by creating a long-term fiscal strategy based on your financial goals, time horizon, and risk tolerance.

^{1. Forbes.com, October 29, 2024}

^{2. PewResearch.org, April 2022}

^{3. Investopedia.com, January 6, 2024}

^{4. CBS.comApril 25, 2024}

^{5. USNews.com, October 21, 2024}

^{6. BusinessInsider.com, November 14, 2023}

^{7. CNBC.com April 1, 2024}