The High Cost of Love: Surviving NYC’s Sandwich Generation Challenges

By Nathan Lee, CFP®, BFA

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Welcome to the sandwich generation—where you’re squeezed between raising your own family and caring for aging parents. With life expectancies rising and families having children later in life, these overlapping caregiving roles are becoming more common.

Navigating the dual responsibilities of raising a family and caring for aging parents is a complex challenge, especially in a bustling metropolis like New York City. For many New Yorkers, the sandwich generation experience is even more pronounced due to the city's high cost of living and the physical proximity often required to oversee caregiving effectively. In NYC, where time is a precious commodity and living spaces are tight, balancing these dual responsibilities can feel like an impossible juggling act.

As a financial planner who is personally experiencing these dynamics, I understand the intricate balance required to manage both personal and professional obligations. With a young daughter and aging parents (healthy for now, thankfully), I often find myself thinking about what the future holds.

This article explores the sandwich generation's multifaceted challenges in NYC, offering insights and strategies to manage these responsibilities effectively.

The Cost of Living in New York City

I don’t have to remind you: New York City is exciting, dynamic, and expensive! Add to that the dual responsibilities of raising a family and supporting aging parents, and it’s no wonder why stress levels in this city are sky-high.

If you’re raising a family in New York, you’re familiar with the hefty price tag on everything from daycare to extracurricular activities. According to a 2023 LendingTree report, the average annual cost of raising a child in NYC exceeds $26,000. In reality, it’s much higher for high-net-worth families. Pair this with potential eldercare expenses such as NYC home care services averaging $25 to $35 per hour, college funds for your kids, and general living expenses, and it becomes clear why financial stress is one of the top concerns for sandwich generation families.

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Understanding the Sandwich Generation

The term "sandwich generation" has become so commonplace that it was added to the Merriam-Webster Dictionary in 2006. The sandwich generation refers to individuals who are simultaneously caring for their children and their aging parents. According to a Pew Research survey, nearly a quarter of adults in the U.S. are part of the sandwich generation.

The sandwich generation concept can be further divided into three distinct categories based on the caregiving dynamics involved.

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1. Traditional Sandwich

This is the classic sandwich generation scenario. Adults, typically in their 40s, caught between two caregiving responsibilities:

• Raising young or school-aged children who still depend on them financially and emotionally.
• Caring for aging parents who may need assistance with daily activities, healthcare, or financial support.

The “traditional sandwich” captures the essence of balancing these dual caregiving roles, often leading to time, emotional, and financial pressures. For example, a parent juggling school drop-offs for their kids while arranging in-home care for an aging parent embodies this category.

Pew Research indicates that more than half of adults in this age group provide financial support for their children or their parents.

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2. Club Sandwich

This category extends the sandwich metaphor further and involves people who are caring for three generations:

• Their own children (sometimes grown but still needing support, like college-aged kids or young adults struggling to achieve financial independence). The club sandwich could also be assisting with their grandchildren.
• Their aging parents or in-laws.
• Their grandparents, who might still be living and require significant eldercare.

The club sandwich generation tends to involve individuals in their 50s or older, reflecting a multigenerational caregiving responsibility. For example, an adult helping their teenage child apply to colleges while coordinating care for their elderly parents and a surviving grandparent falls into this category.

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3. Open-Faced Sandwich

Essentially, the open-faced group consists of anyone involved in eldercare. This group could include single individuals or couples without children who are stepping up to support relatives.

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Why Do These Categories Matter?

Understanding the different types of sandwich generation dynamics can be helpful because each category comes with its own unique challenges:

• Traditional sandwich caregivers might struggle with the time demands of managing school schedules alongside eldercare.
• Club sandwich caregivers are likely to face overwhelming emotional and financial stress due to their multigenerational responsibilities.
• Open-faced caregivers may face loneliness or isolation as they navigate eldercare or single parenting without broader family support.

These distinctions can help tailor financial advice, caregiving resources, and emotional support to meet the specific needs of each group.

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Sandwich Generation Challenges

The sandwich generation faces a unique set of challenges, amplified by the New York City environment:

1. Emotional Strain

Switching between the roles of parent and child can be emotionally taxing. You might find yourself comforting your child after a tough day at school, only to turn around and have a difficult conversation with your aging parents about their declining health or financial stability.

2. Physical Exhaustion

The go-go-go lifestyle of NYC can already be exhausting for parents. For those with parents nearby, the caregiving role often involves hands-on assistance—cooking meals, accompanying them to doctor appointments, or managing household tasks. This can quickly lead to burnout, especially if you’re also managing a demanding career.

3. Time Management Difficulties

Let’s not forget the logistical challenges. Coordinating schedules for medical appointments, school activities, and personal commitments requires exceptional time management skills. The logistical complexities can be overwhelming, especially when managing care for parents who live at a distance.

4. Financial Pressures

The financial burden of caring for children and aging parents is significant anywhere, but the cost is magnified in NYC. Providing financial support to children and parents can deplete your finances if you’re not careful.

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Eldercare in New York: What Are Your Options?

Caring for aging parents in NYC comes with its own set of complexities. From in-home care to assisted living facilities, there’s a wide range of options, each with varying costs and considerations. Regardless of what option you choose, it is costly.

Home Care in NYC: Maintaining Independence

Many seniors prefer to age in place, and hiring home care providers is one way to make this happen. Home care allows aging parents to maintain their independence while receiving help with daily tasks, such as meal preparation, bathing, and medication management. However, this requires oversight. If you live nearby, you’ll have the advantage of directly monitoring the quality of care and making necessary changes.

Assisted Living and Nursing Homes

For parents needing more intensive support, assisted living or nursing homes may be the best option. Finding a reputable facility in NYC can be daunting, with long waitlists and high costs. Remote caregivers face an additional hurdle: visiting facilities to assess their quality is more challenging to do from afar.

Multigeneration Living

If your parents’ health declines, the idea of having them move in with you might be an option. While this arrangement offers benefits like easier monitoring and reduced costs, it also comes with challenges:

Pros:

• Saves on housing and caregiver expenses.
• Strengthens family bonds.

Cons:

• Requires physical and emotional bandwidth (and a lot of it).
• May limit your family’s privacy and independence.
• Space may be limited in your current situation. Finding a larger place in NYC can be costly.

A critical part of this decision is understanding what your parents want. Do they value their independence? Are they comfortable with the idea of living with you, or would they prefer professional care? These conversations may not be easy, but they’re essential.

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Financial Strategies for the Sandwich Generation

Balancing financial obligations for two generations requires thoughtful planning. Here are some strategies to help manage costs while protecting your financial future:

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1. Build a Multigenerational Budget

Creating a budget that addresses the needs of multiple generations is essential. Start by categorizing and prioritizing expenses:

• Child-Related Costs: Include childcare, education, extracurricular activities, and healthcare.
• Parent-Related Costs: Account for home care, assisted living, or medical expenses and factor in any anticipated costs, such as home modifications for accessibility.
• Personal Costs: Don’t forget your own living expenses, retirement contributions, and debt repayments.

Once you’ve got your budget:

• Use a budget tracker to track expenses and allocate funds to each category.
• Review your budget monthly to adjust for any changes, such as increased eldercare needs or unexpected child expenses.
• Set clear financial goals, such as building an emergency fund with at least six month’s worth of expenses.

2. Maximize Tax Benefits

Caregiving can offer some tax advantages, so it’s essential to leverage them where possible. Here are a few common ways to reduce your tax burden:

• Claim a Parent as a Dependent: If you provide more than 50% of your parent’s financial support and they meet IRS income criteria, you may claim them as a dependent.
• Elder Care Tax Credit: Certain eldercare expenses, such as in-home care or adult day services, may qualify for the Dependent Care Credit.
• Medical Expense Deductions: If you pay for significant medical expenses for your parents or children, you may be able to deduct costs that exceed 7.5% of your adjusted gross income.

Keep meticulous records of caregiving expenses, including medical care, transportation, and supplies receipts. Work with a tax professional to ensure you're claiming all eligible deductions and credits.

3. Utilize Employer Benefits

Many employers offer benefits that can help alleviate caregiving costs. Explore your options to see what’s available:

• Dependent Care Flexible Spending Accounts (FSAs): These accounts allow you to set aside pre-tax dollars for eligible expenses, such as childcare or eldercare (if they qualify as a dependent).
• Employee Assistance Programs (EAPs): Some companies provide free or low-cost counseling and caregiving resources through their EAPs.
• Paid Family Leave: If you need to take time off to care for a parent or child, check if your state or employer offers paid family leave benefits.

Review your employer’s benefits handbook or speak with HR to understand what’s offered. Plan ahead to maximize the use of FSAs or other pre-tax programs before the year-end deadline.

4. Consider Long-Term Care Insurance

Long-term care insurance can help cover the high costs of eldercare, such as in-home services, assisted living, or nursing homes. This is especially important if your parents are in good health now but may need care later.

What to look for:

• Policies that cover a range of services, including home care, assisted living, and skilled nursing facilities.
• Inflation protection riders to ensure that benefits keep pace with rising costs.
• Flexibility to allow unused benefits to be transferred to a spouse or family member.

If your parents are still insurable, research policies now before premiums become prohibitively expensive. Speak with your financial advisor to determine if long-term care insurance fits into your overall financial strategy.

5. Open a Health Savings Account (HSA)

If you’re eligible for an HSA (paired with a high-deductible health plan), this account can be a powerful tool for managing healthcare expenses for your family and parents.

• Triple Tax Benefits: Contributions are tax-deductible, the account grows tax-free, and withdrawals for qualified medical expenses are tax-free.
• Rollover Flexibility: Unlike FSAs, HSAs allow funds to roll over year after year, making them an excellent long-term savings vehicle.

Maximize your contributions each year (in 2024, the limit is $4,150 for individuals and $8,300 for families, with a $1,000 catch-up contribution for those 55+).

6. Invest in Your Own Retirement

It can be tempting to prioritize immediate caregiving costs over your financial future, but this approach can backfire in the long run. Remember: you can take loans for college, but you can’t take loans for retirement.

Keep these tips in mind:

• Contribute to your employer-sponsored 401(k) and take advantage of any matching contributions.
• Open a Roth IRA or Traditional IRA for additional retirement savings.
• Aim to save at least 15% of your income toward retirement, even while managing caregiving responsibilities.

Balancing short-term needs with long-term goals requires a nuanced investment approach. It’s not just about growing wealth, but also about protecting it.

7. Estate Planning

Estate planning is an essential component of financial security for the sandwich generation. At its core, it ensures that your assets are distributed according to your wishes and that your family is protected from unnecessary legal or financial complications. If you are financially supporting your parents, be sure to specify how that support will continue if you pass away before them.

Encourage your parents to do the same; their estate plans—or lack thereof—will directly impact you and your siblings.

8. Explore Government Resources

Some government programs can provide financial support or services to assist with eldercare. These include:

• Medicare and Medicaid: Understand what each program covers and whether your parents qualify for Medicaid’s long-term care benefits.
• Area Agencies on Aging (AAAs): These local organizations provide resources for seniors, including transportation, meal delivery, and caregiver support.
• Veterans Benefits: If your parent is a veteran, they may qualify for programs like the Aid and Attendance Benefit, which helps cover eldercare costs.

Research eligibility requirements for Medicaid, Medicare, and other programs to see what your parents may qualify for. Incorporating these financial strategies into your plan can better help you manage the demands of caregiving while securing your family’s financial future.

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Emotional and Practical Considerations

Balancing the needs of your children and parents is no small feat. It is crucial that you find balance in the situation.

• Prioritize Self-Care: It’s not selfish, it’s necessary. You can’t pour from an empty cup. Make sure you’re carving out time to recharge. That might mean hitting the gym, attending a Broadway show, or enjoying a quiet night in. Whatever it is that brings you joy, be sure to make some time for yourself.
• Embrace the Community: NYC is home to countless resources. Connect with other families to share advice, referrals, and support. Leaning on your community can make your responsibilities a bit easier. The NYC Department for the Aging might be a great place to start for support for your aging parent. You could also take advantage of free community events, museum days, and public parks to help offset other high costs you may encounter.
• Delegate When You Can: If possible, distribute some caregiving responsibilities to your siblings. In my case, having sisters near my parents provides an additional layer of support and oversight. If delegating to other family members is not an option, hiring help—a babysitter, house cleaner, or eldercare assistant—can free up time for you to focus on what matters most.

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Your Next Steps

The journey you face as a member of the sandwich generation in NYC doesn’t have to be one you travel alone. As a financial planner who’s professionally experienced and personally invested in this challenge, I’m here to help you create a comprehensive strategy tailored to your unique situation.

At Servet Wealth Management, we understand the nuances of balancing family life, career demands, and eldercare responsibilities. We’re committed to empowering you to make informed decisions that align with your values and goals.

Don’t let the challenges of being in the sandwich generation overwhelm you. Take the first step towards a more balanced and financially secure future. Schedule a conversation today, and let’s explore how we can work together to turn these challenges into opportunities for growth and fulfillment.

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Content in this material is for general information only and is not intended to provide specific advice or recommendations for any individual.

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