As the pandemic shifts caregiving responsibilities, Millennials and women are increasingly among those “sandwiched,” and will likely feel the financial ramifications for many years, according to a new paper.
Defined as those who care for both their children and aging parents, the Sandwich Generation has become increasingly younger, more female and more diverse as a result of the pandemic, according to New York Life’s “Caregiving and COVID-19: How the Pandemic is Expanding the Sandwich Generation.” The paper also suggests these new members may face caregiving and financial challenges that are different than those of their Baby Boomer and Gen X predecessors.
In fact, women now represent a greater proportion of caring for both an aging parent and children caregivers—increasing by four percentage points in just the last two years (64%). In addition, Millennials moved ahead of Baby Boomers and Gen Xers, and now make up 39% of all multigenerational caregivers. Millennials are expected to make up an even greater percentage of this demographic as caregiving responsibilities continue to shift and the population ages, the paper observes.
Meanwhile, Latino caregivers (34%) are most likely to spend higher-than-average time providing care for loved ones, followed by black caregivers (29%) and white Millennial family caregivers (20%).
Out of Pocket
On average, the cost of caring for an aging relative is about $1,000 per month, with 54% of those in the Sandwich Generation reporting spending more than usual per month to care for others as a result of the pandemic. Even more concerning is that 7 out of 10 (69%) members of this generation are paying for this care out of their own daily budgets, resulting in 40% contributing less to their saving and 30% contributing less to their retirement.
Nearly half (48%) expect to be in a caregiving position in some capacity for six or more years, 22% report they would need to adjust their financial strategies within the next 12 months.
Not surprisingly, the financial stability of the Sandwich Generation population varies widely, with nearly half (46%) having $50,000 or more in investments (e.g., stocks, mutual funds, IRAs, 401(k)s), while nearly a quarter (23%) have no financial investments at all.
“As the Sandwich Generation becomes younger and the economic outlook remains uncertain, preparing for the unexpected becomes critical to achieving long-term financial security,” suggests Jeff Beligotti, Vice President and head of Long-Term Care Solutions at New York Life. “This is especially true for Millennials, who are already making up a greater percentage of the Sandwich Generation while still managing the impact of the Great Recession on their early professional years.”
Professional Help
The research also shows that those who reported feeling prepared to provide six or more years of care with no adjustments were more likely to be working with a financial professional.
According to the data, 43% of those prepared to provide care for six-plus years with no adjustments to their financial strategies are working with a financial professional. Moreover, those prepared to care six-plus years are less than half as likely to expect to have to fund future caregiving by:
- withdrawing from emergency savings;
- taking out a personal loan;
- taking on an additional job; and
- delaying or avoiding paying a bill.
Notably, the impact for women who work with financial professionals is even greater. Women who work with financial professionals are nearly twice as likely to agree they would be able to provide three or more years of care before adjusting their financial strategies.
“Despite a wide gap between those who may be prepared to be caretakers for several years and those who may need to adjust their financial strategies sooner, the outlook is not all dark skies,” says Dylan Huang, Head of Retail Annuities, Investment Solutions and Wealth Planning at New York Life. “This report shows that those working with financial professionals are able to improve their financial well-being and feel more confident about their financial solutions, their family’s future, and their own retirement.”
The findings are based on a poll conducted July 22-Aug. 5, 2020, among 1,000 Sandwich Generation adults.
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