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Is the Sandwich Generation Financially Sound?

Mendy Wright doesn’t have a Lexus in her garage – and she’s okay with that.

The 50-year-old has been through every parent’s worst nightmare, and as a result, she knows what’s truly important in life. She shares her Dayton, Ohio home with her 78-year-old father, husband and 5-year-old grandson, Jaxson, whom she is raising after tragically losing her 27-year-old daughter, Kaleigh. Her father is battling prostate cancer, among other ailments, and will be undergoing surgery for a hip replacement in early 2019.

“Simultaneously caring for my father and my grandson has been a tremendous struggle,” Wright said. “When these things happen, all expectations of where you think you need to be in life go out the window. You have to find your blessings. Am I okay with not driving a luxury car? I have to be, because there are other people who are depending on me and my paycheck.”

Wright is part of what is known as the sandwich generation – people who have financial responsibilities for children and grandchildren as well as elderly parents.

PNC commissioned a survey to understand how current and future members of the sandwich generation handle financial decisions and any related stress involving investing and retirement. Survey respondents were between the ages of 36-60 and were either the main financial decision makers or shared financial decision making duties in their household.

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“The survey revealed that current members of the sandwich generation, as well as those we call ‘half sandwich’ – folks caring for either children or elderly parents, but not both – are under financial stress. They’re struggling to save for their own needs,” said Rich Ramassini, director of strategy and sales performance at PNC Investments. “Adding the demands associated with financially supporting children and/or elderly family members now or in the future, paints a very grim picture for this demographic unless they take immediate action.”

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Retirement on the Line

According to the survey, almost a third of the members of the sandwich generation have less than $25,000 saved for retirement, and only 15 percent have more than $500,000 saved.

Indeed, Wright, a compliance testing manager for PNC’s mortgage group, is concerned about her own financial future.

“I do not feel prepared for retirement, even though I’m the breadwinner in my family,” she said. “I have had to tap my 401(k) for unexpected expenses, including the cost of my daughter’s funeral. If I was forced into retirement today, I would have to sell my home and find somewhere less expensive to live. I’m already concerned about the possibility of taking care of myself in my 70s and paying for things like groceries and medications.”

According to the survey, 25 percent of the sandwich generation currently pay for childcare for children under the age of 18, and 20 percent expect to do so in five to 10 years. Sixteen percent of respondents currently care for elderly family members, and 32 percent expect to do so in five to 10 years – yet only 20 percent say they have planned for those financial responsibilities.

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Wright says that in hindsight, she wishes she would have been more thoughtful about building a savings account to lessen some of the financial burden.

“Sometimes life throws you a curve ball, and everything changes. You have to push up your sleeves and just give it your all,” she said. “I wish I would have told my younger self to prepare as best as I could and stay young in my heart and mind – I need the energy!”

Overwhelming Responsibilities

The survey revealed that those with multi-generational financial responsibilities are twice as likely to agree they’re overwhelmed as those who do not have financial responsibilities for children or elderly family members.

Wright says aside from the financial stressors, the most challenging part is time management: “Making sure everyone has what they need, when they need it.

Balancing a career with caring for a young child and aging parents can be overwhelming at times. Myself and my fellow sandwich generation members are under a tremendous amount of stress,” Wright said. “Our daily lives are chaotic and can appear disorganized because we are constantly juggling a million responsibilities within each day. I wake up at 4:30 a.m. every day and don’t go to bed until after 11 p.m. every night.”

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Ramassini noted that survey respondents who reported working with a financial advisor or having a financial plan – written or informal – feel less stressed and overwhelmed than those who have no plan or don’t have an advisor.

“A financial plan will not only help you document what you need to do in order to achieve your goals, but now we also know that it can influence your emotions and confidence,” he said. “The best strategy to feel more financially secure and have a greater chance of reaching your goals is to work with a financial planner who can create a personalized plan that incorporates your unique situation, objectives and habits.”

Wright echoed those sentiments and encouraged people who find themselves caring for children and elderly parents to have a plan and support system.

“Sticking to a budget is tough; more often than not you end up budgeting from one payday to the next. You absolutely need to discuss your finances with a financial advisor,” she noted. “It’s amazing how little things can add up to help build a better financial future.”

Despite the hardships she has been through, Wright maintains a positive outlook and chooses to see the glass half full.

“The most rewarding part is knowing that we are a family – we get to live under one roof and love one another through the good times and the bad times,” she said. “All the hard work pays off when I get to walk through my front door and see my dad doing well. Seeing Jaxson’s face light up as he runs to greet me when I pick him up from his extended care program is priceless.

“The best advice I can give to anyone going through this situation is to be kind to yourself,” she concluded.

Rich Ramassini is director of strategy and sales performance at PNC Investments

According to PNC’s sandwich generation survey, almost four in 10 sandwich generation members do not have an emergency fund.