Caught in the middle. That’s where many American adults in their 40s and 50s find themselves. “As people are living longer and many young adults are struggling to gain financial independence, about a quarter of U.S. adults (23%) are now part of the so-called ‘sandwich generation,’ according to a Pew Research Center survey conducted in October 2021. These are adults who have a parent aged 65 or older and are either raising at least one child younger than 18 or providing financial support to an adult child.”[1]

According to the Pew survey, “Americans in their 40s are the most likely to be sandwiched between their children and an aging parent. More than half in this age group (54%) have a living parent age 65 or older and are either raising a child younger than 18 or have an adult child they helped financially in the past year. By comparison, 36% of those in their 50s, 27% of those in their 30s, and fewer than one-in-ten of those younger than 30 (6%) or 60 and older (7%) are in this situation.”[2]

The type of support provided by the sandwiched generation varies as they age. For example, those in their 40s are more likely to have an aging parent and to have minor children living at home.

Chart 1: Adults in their 40s are the most likely to be in the "sandwich generation"

% who have a parent 65+ and have a child younger than 18 or have provided financial support to an adult child in the year prior to the survey

Age Percent meeting criteria
All adults 23
18-29 6
30-39 27
40-49 54
50-59 36
60+ 7

Source: Survey of U.S. adults conducted Oct. 18-24, 2021.
PEW RESEARCH CENTER

Those in their 50s and 60s are more likely to have an “aging parent and an adult child that they have helped financially.”[3] Culturally, as of 2013, 75% of Americans believe that they “are obligated to provide financial support to an aging parent if needed.” While fewer believed that they were obligated to help a grown child who needs financial help, as of 2013, more than half of Americans (52%) said providing such assistance was “a parent’s responsibility.”[4]

Of course, aging parents require more than financial support and many adults provide non-monetary support to their aging parents, including emotional support, personal care or help with everyday affairs.[5] As of 2013, most Americans believed that “at some point in [their lives] they [would] be responsible for caring for an aging parent or elderly family member[.]”[6]

Chart 2: Will You Have to Care for an Aging Family Member?

Q: How likely is it that, at some point in your life, you will be responsible for caring for an aging parent or another elderly family member? (%)

Group Already done/Currently doing (%) Very likely (%) Somewhat likely (%) Net (%)
All 11 47 21 78
Men 8 47 22 77
Women 13 47 19 79
Younger than 40 3 62 25 90
40-59 14 48 20 81
60 and older 18 23 15 56
White 13 43 20 75
Black 7 48 25 81
Hispanic 4 64 19 87
Married 11 50 21 81
Unmarried 10 44 20 75

Notes: Based on all adults, N=2,511. Whites and blacks include only non-Hispanics. Hispanics are of any race. “Unmarried” includes those who have never been married or are divorced, separated or widowed. “Already done/Currently doing” is a volunteered response. Voluntary responses of “Depends” and “Don’t know/Refused” not shown. Figures may not sum to “NET” due to rounding.

Source: Survey of U.S. adults conducted Oct. 18-24, 2021.
PEW RESEARCH CENTER

However, even as most Americans believe it to be a responsibility to care for an aging parent, “among those who had not yet retired [as of 2015], only about 20% … expect the Social Security system to have enough money when they are ready to retire to provide them benefits at current levels. An additional 31% say they expect to receive benefits at reduced levels, and 41% think they will receive no benefits at all.”

Working hard in one’s prime earning years, caring for an elderly parent and providing for children can leave little time to care for oneself, let alone plan for one’s future. Yet, with so many demands upon one’s time and finances, it is more important than ever to have a plan, even if that plan must change over time to accommodate changed circumstances.

First, Plan for Yourself

With all of the people and activities competing for your time and attention, you may find yourself delaying or skipping the things that you require to keep yourself going, or worse yet, engage in behaviors with long-term adverse effects.[7] However, if you don’t take care of yourself, you may not be able to take care of others. It seems simple, but it is not easy to do. Following are a few things that can help:

  • As you care for the others in your life, be sure to schedule time to also do whatever it is that matters to you.
  • Do your best to engage in healthy activities. Eat healthy foods (yes, everyone loves french fries and it’s ok to eat them once in a while) but that is different from eating them every day, exercise, and avoid overdoing harmful things.
  • Don’t do all the work yourself. Be sure that everyone in the household has age-appropriate jobs, and that the assigned persons complete their tasks.
  • Once in a while, take a break. If you have adult siblings, enlist them to assist you in caring for your aging parent. If you don’t have siblings (or siblings who will help out), perhaps a close friend or neighbor could help. For short breaks, you may even be able to hire assistance to give you time off to recharge.
  • If you feel overwhelmed, find someone to talk to. In this age of COVID-19, many employers offer help and support services for their employees. Take advantage of these. If your employer does not offer such a service, find out if your health insurance will pay for telemedicine appointments with a licensed mental health professional. Get help if you need it.

In the end, you will find it easier to care for the others in your life if you care for yourself.[8]

As you should not neglect your personal health, you should not neglect your financial health either. Like the demands placed on your time, caring for multiple generations may also place demands on your finances. Should you fail to take care of your own finances, you might find yourself unable to retire, or able to retire but with a significantly reduced lifestyle or dependent upon your children in your senior years. Consider the following as you plan for your future:

  • Even though you are busy, take time to prepare and periodically review a financial plan. Your PNC Private BankSM Wealth Strategist can prepare and review a comprehensive financial plan with you.
  • If your employer has a qualified plan and you are eligible to participate, contribute what you can. If your employer matches your contributions, contribute at least enough to have your contribution fully matched. By not contributing enough to be fully matched, you are missing out on additional compensation.
  • If you are able, maintain a cash reserve equal to approximately six months of expenses. The unexpected happens, so don’t be caught unprepared.
  • Avoid high interest rate debt. If you must take on debt, look first to sources of debt other than high interest credit cards. You may be able to obtain secured lines of credit from a commercial lender that charge less interest than a credit card.
  • Take advantage of employer-provided benefits, such as life insurance, health insurance and disability insurance. These benefits can be particularly important for your family if you are unable to obtain coverage on your own.

Make sure your planning documents are up to date. Consider what would happen if you were no longer here, or unable to take care of yourself (let alone others). Consider the following:

  • Be sure your will is up to date.
    • Name guardians for your minor children. As a parent, it is terrible to imagine and, perhaps, difficult to determine who that person would be. Every family is different, the best choice for one family may not be appropriate for another. While there is no perfect choice for such a difficult decision, you will generally want to find someone whose values align with yours. Although a court must always approve your choice for guardian, should you fail to appoint a guardian in your will, a court will not know your intentions. By failing to nominate a guardian in your will, you are leaving that decision to a legal process over which you have no control.
    • Name an executor (and a successor to that person) who will administer your estate.
    • Create trusts for minor children. Your trustees will receive your property and manage it for your children. In this way your property will benefit your children and be delivered to them when they are mature enough to receive it.
  • Have a power of attorney in place so that someone can manage your finances if you can’t.
  • Have sufficient life insurance coverage and review it periodically. Consider having the life insurance owned by a trust. If you were to die, the death benefit from the insurance policy could provide for your children and even for the elderly parent under your care. By holding the policy in trust, the death benefit would be paid to a trustee who would manage and invest it and see that it is used properly for the care of those you intend to support.
  • Don’t give funds directly to your elderly parent. For one thing, the parent may not be able to manage the money. Also, giving assets to a parent may prevent the parent from qualifying for Medicaid, should that become necessary. Further, giving funds to a parent may subject those funds to an additional estate or inheritance tax on the parent’s death.

Just as your will appoints guardians for your children, you should ensure that your parent’s planning documents have a back-up plan should you be unable to continue caring for your parent.

It is too easy to neglect oneself when managing a busy life and being pulled in all directions. However, failing to care for oneself, both personally and financially, can have both short- and long-term adverse consequences. As hard as it may be to do, taking care of yourself will allow you to better care for others.

Understand the Resources Available to You

You do not have to “go it alone” when caring for an elderly parent. Many states have programs designed to help the elderly or disabled residents of that state. For example, “The Administration for Community Living [ACL] was created around the fundamental principle that older adults and people of all ages with disabilities should be able to live where they choose, with the people they choose, and with the ability to participate fully in their communities.”[9] Established as part of the Department of Health and Human Services, the ACL maintains a directory of state service providers for older adults and their families.[10] Services provided include, in-home care, respite services for caregivers, transportation services, housing resources, legal assistance and protection from abuse. The “Caregiver Corner” is dedicated to helping caregivers find the resources needed to care for aging loved ones.[11] The National Institute on Aging, also provides useful resources for caregivers.[12]

Along with support services, there may also be financial resources available to you or your elderly loved one. There are many programs, each with different eligibility requirements. Admittedly, the requirements to obtain financial help are complex and may be confusing, and the paperwork may be daunting, but don’t be deterred.

If you need help, you can consult an attorney who specializes in elder law. In the end, obtaining all of the financial support available may free up your personal resources for other things, such as a well-deserved break, a cash reserve or retirement savings.

Financial assistance may be provided by many separate government programs. Some of the programs, like Medicaid, are administered jointly by the states. Some of the programs are “means tested” and not available to wealthier people. Some have special qualifications, like those provided by the Veterans Administration. The great number of programs and their many rules and regulations make it impossible to fully review them here. Nevertheless, below is a partial list of programs that may provide financial support.

Social Security

“Social Security is part of the retirement plan for almost every American worker. It provides replacement income for qualified retirees and their families.”[13] The amount of your benefit can vary based on many factors, such as, full retirement age based on your date of birth, when you begin receiving benefits, your earnings history, and whether you are claiming your own benefits or claiming benefits as a spouse or surviving spouse. The rules can be quite complex and careful analysis is necessary to determine if you are receiving your optimal benefit.

Medicare

Medicare is our country’s health insurance program for people age 65 or older…. The program helps with the cost of health care, but it does not cover all medical expenses or the cost of most long-term care. You have choices for how you get Medicare coverage. If you choose to have Original Medicare (Part A and Part B) coverage, you can buy a Medicare Supplement Insurance (Medigap) policy from a private insurance company.”[14] Pay close attention to the date by which you must enroll in Medicare, as missing the deadline could result in increased premiums for Medicare Part B.

“Medicare doesn’t cover custodial care, if it’s the only care you need. Most nursing home care is custodial care, which helps you with activities of daily living (like bathing, dressing, using the bathroom, and eating) or personal needs that could be done safely and reasonably without professional skills or training. Medicare Part A (Hospital Insurance) may cover care in a certified skilled nursing facility (SNF). It must be medically necessary for you to have skilled nursing care (like changing sterile dressings).”[15] Some skilled nursing home care may be covered by Medicare, but this is limited. Medicare Part A (hospital insurance) covers skilled nursing care for a limited time (on a short-term basis) if all of these conditions apply:

  • You have Part A and have days left in your benefit period to use.
  • You have a qualifying inpatient hospital stay.
  • Your doctor has decided that you need daily skilled care. You must get the care from, or under the supervision of, skilled nursing or therapy staff.
  • You get these skilled services in a Medicare-certified [skilled nursing care facility (SNF)].
  • You need these skilled services for a medical condition that’s either:
    • A hospital-related medical condition treated during your qualifying 3-day inpatient hospital stay (not including the day you leave the hospital), even if it wasn’t the reason you were admitted to the hospital.
    • A condition that started while you were getting care in the SNF for a hospital-related medical condition (for example, if you develop an infection that requires IV antibiotics while you’re getting SNF care).”[16]

Even though covered by Medicare, you would have to pay for this benefit. After 20 days of care, you would have a copay and after 101 days of care, you would bear all costs.

Medicaid

“Medicaid provides health coverage to millions of Americans, including eligible low-income adults, children, pregnant women, elderly adults and people with disabilities. Medicaid is administered by states, according to federal requirements. The program is funded jointly by states and the federal government.”[17] Medicaid is a means-tested program. Accordingly, those with assets greater than certain thresholds are not eligible for this program. Requirements vary from state to state, and it is not possible to list them here. Certain assets are counted toward the eligibility requirements while others are not. It may be possible to divest oneself of assets in order to qualify for Medicaid; however, for some programs, in most states and the District of Columbia, and subject to exceptions, there is a look-back period that would count assets divested in the 60 months prior to the application for Medicaid is filed. There may be strategies to plan for Medicaid qualification. Consult an experienced elder law attorney with expertise in the state where your loved one lives to learn more about advance planning for Medicaid.

VA Benefits

The Veterans administration provides benefits to elderly veterans. These benefits include disability compensation, pension benefits, health care, home loans and insurance. Veterans may receive extra compensation if they require aid and assistance (if the veteran requires help performing daily functions, which may include bathing, eating or dressing; the veteran is bedridden; the veteran is a patient in a nursing home; or the veteran’s eyesight is limited to a corrected 5/200 visual acuity or less in both eyes). Veterans may also receive additional compensation if they are housebound.[18] Veterans may also be able to receive geriatric, extended and long-term care.[19] Veterans may also be eligible for home and community-based services.[20]

Other Programs

Established in 2000, the [National Family Caregiver Support Program (NFSCSP)] provides grants to states and territories, based on their share of the population age 70 and over, to fund a range of supports that assist family and informal caregivers to care for their loved ones at home for as long as possible. . . . NFCSP grantees provide five types of services:

  • information to caregivers about available services,
  • assistance to caregivers in gaining access to the services,
  • individual counseling, organization of support groups and caregiver training,
  • respite care, and
  • supplemental services, on a limited basis”.[21]

Long-Term Care Insurance

If an elderly person has long-term care insurance and qualifies for a benefit, the funds paid from the policy can substantially offset the cost of care. Often the policy benefit can be used to bring service providers into the home or to offset the cost of care in an assisted living facility or skilled nursing facility. Each policy is governed by a contract between the owner of the policy and the insurance company that issued the policy. Benefits can vary greatly from policy to policy. Check with the insurance company that issued the policy or a licensed insurance agent to see if your loved one could be eligible for benefits under a policy of long-term care insurance. PNC Private Bank has insurance strategists who can help you review and understand the benefits available under a policy of long-term care insurance.

Other Financial Assets

Look for financial assets that may be hiding in plain sight. Often an elderly loved one has a policy of life insurance. If that policy has a long-term care rider, it may be possible to access the death benefit while the insured is still living to pay for long-term care (including home health aides, assisted living expenses or skilled nursing expenses). Alternatively, if a policy of life insurance is no longer needed, it may be possible to surrender the policy for its cash value. Note that surrendering a policy can cause an income tax.[22] However, before simply surrendering a policy of life insurance, perhaps consider selling it. The owner of the policy may receive more from selling the policy than from its surrender to the insurance company. As with the surrender of a life insurance policy, the sale of the policy can cause an income tax.[23]

Private Services

If you can afford it, private service providers can provide assistance around the home, someone to stay with an elderly parent or young children while the caregiver takes a break, and even housekeeping and laundry services.

Caregivers sometimes ask if they can be paid for providing care to a loved one. Some states have programs that allow this. These programs are funded by Medicaid, the VA or the states. For example, Medicaid has the Consumer-directed Personal Assistance Program.[24] In states where the program is available, eligibility varies from state to state.

There may also be tax benefits available to the caregiver of an elderly parent or young children.

“The child and dependent care credit is a tax credit that may help you pay for the care of eligible children and other dependents (qualifying persons). The credit is calculated based on your income and a percentage of expenses that you incur for the care of qualifying persons to enable you to go to work, look for work, or attend school.”[25] Also, the child tax credit may also be available to you.[26]

Understand Your Responsibilities

As the caregiver for an elderly adult, you may be named as agent or attorney-in-fact under a power of attorney (for ease of reference, agent). The person who creates a power of attorney is known as the principal. Depending upon your state law and the way the power of attorney is drafted, you may have near complete control of the principal’s assets. As an agent, you stand in a fiduciary position to the principal. This means that every action you take must be done in the best interest of the principal. Generally, you may not benefit from your actions. “A trustee is held to something stricter than the morals of the marketplace. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior. As to this there has developed a tradition that is unbending and inveterate.”[27] This does not mean that you cannot be paid a reasonable fee for your services as agent.[28] However, it does mean that you must always use the principal’s funds for the benefit of the principal. In fact, the principal, or after the principal’s death, the principal’s family members can require you to account in court for the use of the principal’s assets.[29] If it is found that you improperly used the principal’s assets you could be forced to replace them with your own funds.

You may also be asked to serve as trustee of a revocable trust holding the assets of the person for whom you are caring. A trustee is also a fiduciary. As trustee you are held to the strict standard of care required of a fiduciary and you must also strictly follow the terms of the trust.

If your elderly parent is in a skilled nursing facility, it is important to understand the laws of the state with respect to the payment of expenses associated with the parent’s care. Many states have filial responsibility laws which can require the children of an elderly parent to pay for nursing home expenses.[30] You may be liable even if you do not live in the state where the nursing home is.[31]

A final word of caution is in order. You may be asked to sign a document on behalf of an elderly parent. Always consult an attorney before signing any legal document. Signing a document in the wrong way or a document that contains a guarantee could make you personally liable for your parent’s obligations.

Seek Assistance

If you are a member of the “sandwich generation” you know how hard it is to juggle all of your competing responsibilities. It is important to remember that you are not alone.

There are resources available to help you. Nevertheless, it can all be very confusing and time consuming.

It is important to assemble a team that can assist you in managing your busy life. Your PNC Private Bank team can be part of that group, which could also include attorneys, accountants, health care professionals, friends and neighbors.

Life can get overwhelming sometimes, especially when you are pulled in many different directions at once. If you need help, reach out to any member of your PNC Private Bank Team, let us work with you to keep your plans in order and help organize the resources you need to manage your busy life.

For more information, please contact your PNC Private Bank advisor.