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TESS VIGELAND: One out of every eight Americans aged 40 to 60 is both raising a child and caring for an aging parent. It’s a startling number that is expected to get bigger and bigger as baby boomers reach retirement age and find they haven’t saved enough. Those in the middle have been dubbed the “Sandwich Generation.” And they’re the focus of a special section in this weekend’s New York Times. In a moment we’ll talk with the “Your Money” columnist Ron Lieber about their findings.
But first, let’s hear from someone who currently resides in the sandwich.
Adrienne Quill: My name is Adrienne Quill. I’m a homemaker and I live in Mahtomedi, Minn., which is a suburb of St. Paul. My parents are 89 and 82 years old, they live in Indianapolis, Ind. I have two sons; Murphy’s in kindergarten this year, about a year ago we had our second son. My father’s still living independently, but does need some help. I also check in on my mother over at the assisted living facility. I do feel myself pulled in two directions: my parents were both very good to my sister and me, and you know, of course my sons need a mother. I am responsible simply because they gave us so much, and my father is still giving us so much. And I feel this is the least I can do for him. I think at some point we’re going to have to consider a move, just so I can be more available to them.
TESS VIGELAND: Ron Lieber, that just sums up the story.
RON LIEBER: It does, doesn’t it? And then multiply that by 5 million, 10 million, however many people are that are out there in their 40s or 50s who have aging parents who may be running out of money and kids getting ready for college or coming out of college, who are themselves having trouble sort of launching themselves. And you get a sense of how many people who are out there.
VIGELAND: Certainly this isn’t a new phenomenon, though. I mean, we’ve had generations like this for time immemorial. Why has it become such an issue?
LIEBER: Well, a couple of things. First of all, it’s longevity. When people live longer, they need more care. They might be in a nursing home longer. But the other thing we’re dealing with is yet another impact of the economic environment, right? If people are in a situation, say the oldest generation, the top of the sandwich, so to speak, if their resources have been depleted or their investment portfolios are not what they once were, then that becomes an issue. Then you look at the younger generation. The younger generation is going to college. Colleges are increasingly expensive, right? So people are coming out with higher levels of student loan debt and they’re graduating into an economy that is not ready to offer them jobs that will allow them to be financially independent. And meanwhile, these grownups in their 40s and 50s are kind of in the middle of all this. And they too unstable employment at just the moment they were hoping to ramp up their retirement savings. So the things that are going on in the economy are affecting all three of these generations and that on top of increased longevity makes the squeeze inside of the sandwich that much more difficult to deal with than it might have been 10 or 20 or 30 years ago.
VIGELAND: So how do you get started on that conversation? How do you even know that it’s an appropriate one to have and who do you have it with?
LIEBER: Well it’s tricky, but you have to start with your parents. Have they planned for their own long-term care? And if they haven’t, how might a a stay in a nursing home at $75,000-$100,000 a year deplete their assets?
VIGELAND: And how do you — if you’re a member of that sandwich group — how do you prepare for it?
LIEBER: It’s a really tricky thing, Tess. You have to hope that your employment situation, at least, is stable enough that you can bear it. I think the first thing you have to do is, rather than sacrificing financially yourself, you have to think carefully about what are the all the things that you can do with your parents and you parents’ assets that might allow them to stretch further than you think they would. One of the things we tried to do in our special section was to talk about some of the products and services that are out there and consider which ones could potentially be more useful in the coming years and which ones are a little more uncertain.
VIGELAND: Well let’s talk about a couple of specifics there. I know that you, in particular, wrote about long-term care insurance. And boy do we get a lot of questions about that here. People just don’t really understand when they’re supposed to start thinking about that and really what it’s going to cost them.
LIEBER: Yeah. It’s tricky, isn’t it? I mean, first of all, I suppose we should define the term. You know, a lot of people out there, Tess, think that Medicare is going to cover a five-year stay in a nursing home or two hours of assistance from a home health care aid. And the fact is that it’s not going to. And so long-term care insurance is designed to pay a certain amount, or even up to all of the amount, for your stay in a nursing home or for your move to an assisted-living facility. That’s what it is for.
VIGELAND: But, of course, people are scared to buy it because they’re worried about having claims denied or decades of paying premiums that they then don’t use.
LIEBER: Right. It turns out that there are at least 9 or 10 sort of mental hurdles that people attempt to clear before they even shop for long-term care insurance. It’s an enormously complicated product. But just sort of getting to the decision that yes, I do in fact need long-term care insurance, it involves sort of talking yourself out of all sorts of things from assuming you can pay for the whole thing by yourself without insurance to assuming that your kids are going to take care of you physically or financially. All these things that people sort of talk themselves into, but they may not always be right about them.
VIGELAND: So these are the types of things that — I mean, obviously the people in the sandwich generation need to start thinking about as they age, but is this also something that you talk about with your parents as products for them to keep the problem from happening in the first place?
LIEBER: Absolutely. Some forward-thinking parents purchase long-term care insurance, say for themselves, as an act of love towards their kids cause they don’t want their kids to have to take care of them. But if your parents have not brought this up, it’s certainly well within your right as a member of that family to raise it with your parents and to say, look, do we have a plan for this? Not talking about it is a bad idea for everybody.
VIGELAND: Ron Lieber writes the “Your Money” column for the New York Times and their special section about the sandwich generation is out and we’ve got a link to that. Ron, thanks so much.
LIEBER: Thanks for having me.
VIGELAND: This is part of a new partnership with the New York Times. We’ll be having more over the coming weeks.
Next week, we’ll hear about another issue facing the sandwich generation: when so much of the family finances are going toward care for aging parents, what happens to the kids’ inheritance?
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