How many parents are providing financial support to their Millennial and Gen Z children?
Many parents still support their adult children. Here’s how common financial aid really is.
Planning one person’s finances is daunting enough, but planning for three generations is downright daunting.
But that’s exactly what the tens of millions of Americans in the “sandwich generation” need to think about, as they simultaneously care for children and parents, financial experts say. If we don’t, we risk becoming financially drained and mentally and physically exhausted, as many of us are already experiencing.
A survey of 1,024 Americans between the ages of 40 and 59 conducted last year by retirement services company Athene showed that nearly 75% of respondents from the sandwich generation were adjusting their retirement goals to support adult children or elderly relatives. They cut back on expenses, delayed retirement or withdrew retirement benefits, while some were planning not to retire at all.
“It’s a very tough environment, paying for children, adult children and elderly parents,” said Miklos Ringbauer, a certified public accountant and founder of MiklosCPA Inc. Caring for people haphazardly on a day-to-day basis “is a disservice to yourself, your future, and your wealth.”
When should Americans of the sandwich generation start making plans?
As always, experts say the best time to plan is early, before an event such as a parent becoming seriously ill occurs. Early planning always gives people more tools and flexibility to protect you and your loved ones.
Experts said the main focus should be on long-term care planning. According to the U.S. Department of Health and Human Services (HHS), approximately 70% of people who turn 65 will need some type of long-term care. Long-term care includes a wide range of care, from assistance with daily tasks to more complex medical care in the home, institutional settings such as nursing homes, or community-based settings such as assisted living facilities.
Traditional health insurance and Medicare typically do not cover long-term treatment and can be expensive. The median cost of five-day adult day care in 2025 was $24,700 a year, while the cost of a non-medical home caregiver was about $80,080, according to a cost-of-care study by planning firm CareScout. According to CareScout, the cost of a semi-private nursing home room is $114,975 per year, and $129,575 for a private room.
How can people plan for long-term care?
Advisers say wealthy people may be able to afford or buy long-term care insurance, which can be expensive. Long-term care insurance premiums can rise year by year, and if you don’t use insurance, you won’t be able to recover your money.
Rob Barnett, principal investment advisor and professional tax attorney at Outlook Financial Center, said some people may consider a hybrid life insurance policy. These fixed-cost policies ensure that the beneficiary is paid either as a long-term care benefit or a death benefit, so there is no money left on the table even if you are lucky enough not to need long-term care, he said.
Government programs are also an option, said Joseph Flesard, an attorney with elder law specialist Simasko Law Firm.
“One of the biggest mistakes people make is not taking advantage of the public benefits available to their parents,” he said.
Fressard said veterans may be eligible for long-term care or can plan on using Medicaid. Both have income limits and other requirements, so families should review them and begin preparing to qualify in advance.
Because Medicaid has a five-year lookback period, families cannot simply transfer assets and qualify for Medicaid. Advisers said parents should develop and begin a plan to legally dispose of their parents’ excess assets by paying for expenses such as home repairs, accessibility upgrades, prepaid burial arrangements and unpaid medical bills.
Families can also create an irrevocable trust to remove assets that count toward Medicaid eligibility, but note that irrevocable trusts generally cannot be changed.
“You could put your parents’ home in an irrevocable trust and sell it and use the money to pay for long-term care, but the money must remain in the trust to be used,” Flessard says.
Experts say all of these options can help parents take most of their expenses out of their budget so they can focus on themselves and their children.
What would you do if something happened in your life and you didn’t have a plan?
Advisers say there’s no need to panic if your parent is unexpectedly hospitalized and suddenly needs long-term care, something you didn’t plan for.
Although your options may be limited, “it’s never too late to start planning,” Ringbauer said.
“Stable your own finances first,” he said. “It’s like getting on a plane and putting on an oxygen mask before helping others.”
Advisers say the bare minimum you should do for yourself is to contribute enough to your company’s 401(k) plan to match it with the company, then turn to looking after others.
If you have siblings, talk about your plans and how much each person can contribute to your parents’ expenses, Ringbauer says.
One place to look for help is your company’s benefits plan. Kate Winget, chief revenue officer at Morgan Stanley at Work, said: “A solid starting point is to take a closer look at how workplace benefits can help relieve pressure.” “Benefits like flexible working, time off, dependent care benefits and financial wellness tools can be a game-changer, but many people don’t even realize they’re already available to them.”
If you have to pay, Ringbauer said you should try to pay in a tax-efficient way to save on taxes.
If your parent needs care and is declared as a dependent on your tax return, you may be able to work because the pre-tax money from the Dependent Care Flexible Spending Account may be used not only for child care but also for adult day care or home care, he said. You pay for your medical expenses with pre-tax money from your health savings account.
Tax credits for parents and children may also be available, including:
Be sure to keep detailed records of all financial support for taxes.
Medora Lee is USA TODAY’s money, markets and personal finance reporter. Please contact us at mjlee@usatoday.com. Subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.
