Amanda Bailey considers her family one of the more fortunate “sandwiches.”

With two children away at college, Bailey’s 85-year-old father Fred came to live with her in their Katy, Texas, home after his wife died from Alzheimer’s. He remained for a year and a half, long enough for Bailey to piece together savings, his pension, Social Security benefits and other resources to place her father in an assisted living community.

It didn’t hurt that Bailey, 50, had some 10 years’ experience working in the long-term care field and had recently started Cypress Trio, an online resource for families looking for information about long-term care providers: “I don’t know if I would have done half the stuff I did if I hadn’t worked in the industry,” she said.

The term “sandwich generation” is unnervingly appropriate. It represents adults who are supporting children of their own while looking after aging parents at the same time. It’s also a situation fraught with financial uncertainty and a stress-riddled environment that few families plan for.

But you don't have to work in the long-term care field, like Bailey, to start thinking about the dynamics of a “sandwich” arrangement, before it occurs, to make certain that those in the middle don’t end playing the financial martyr.

A widespread reality

While lengthening life expectancy is certainly good news, it’s also become increasingly common for adults to care for aging parents in some capacity while raising children of their own. A recent Pew Research Center study found:

  • Nearly half (47 percent) of adults in their 40s and 50s have a parent 65 or older while either raising a young child or financially supporting a grown child (age 18 or older).
  • Roughly one in seven middle-aged adults (15 percent) is providing financial support to both an aging parent and a child.
The issue isn’t confined to simple economics, although helping out an aging relative can certainly strain finances. A 2015 study by Genworth Financial put the annual average cost of a semi-private nursing home room at a staggering $80,300.

“The risk of paying for nursing care can be financially devastating to a family,” said David Henderson, a Greenwood Village, Colorado, certified financial planner.

Add to that the uncertainty of whom to help out financially and to what degree.

“People tend to react emotionally,” said Steven Kaye, a Warren, New Jersey, certified financial planner. “They think of their parents and remember how they’re the ones who paid their way through college.”

The risks of acting on emotion are magnified by the fact that many families are forced to react to a sandwich generation situation rather than planning for it in advance.

“It can be purely reactive,” said Kaye. “It’s something like, all of a sudden, ‘Mom has to come live with us.’”

Plan for the likelihood

Planning for a sandwich generation situation isn’t an exact science. Health, individual family dynamics and even fate can all determine what sort of plan needs to be considered — if any.

But, say financial consultants, if a family has both young children and older relatives in the mix, it’s essential that some long-term planning be discussed. That can include everything from shopping for long-term care insurance to saving for college.

“If someone has a financial plan done, I consider it a form of professional negligence to ignore this,” said Kaye. “From the planner’s perspective, if the issue is addressed, it’s then his or her job to drill down to get more details.”

Issues can include:

  • How much do the parents have in assets? In what form (personal savings, pensions)?
  • How much should children be expected to contribute to the cost of college? Should student loans be considered and, if so, how large?
  • Have the parents paid off their home or do they expect to?
  • Are the parents currently dealing with any significant health issues?
  • Are there any unusual quirks to the parents’ finances? “For instance, what if Dad is the only one who’s ever handled the checkbook?” said Kaye.
“The earlier you get into the topic, the more planning that’s available to you,” said Kaye.

Don’t sacrifice

In a situation that can be wrought with emotion, it can be tempting for those caught in the middle to downplay their own needs. In some cases, that can mean putting their own long-term savings on hold to help pay parents’ expenses — or, on the other end, helping to pay more for children’s college educations than they should or supporting kids who have graduated but who are struggling financially.

“The biggest risk boomers face in dealing with this is that they will use their retirement savings to support their older and younger dependents. This would be a huge mistake,” said Dan White of Daniel A. White and Associates, a Glen Mills, Pennsylvania, financial planning concern. “For instance, the first thing parents should do if they’re allowing adult children to live with them is to get them to share in the expenses. They need to pull their own weight.”

Adults in the middle of the sandwich have to take a similar approach to lending financial help to parents — a decision some may see as a bit heartless, but necessary nonetheless.

“I always remind my clients that their own retirement is still goal number one,” said Henderson. “While it can be difficult to save for your golden years while also caring for a parent as well as your children, it’s very important you do as much as you can so your money will have time to grow and compound.”

Don't overlook government and outside resources to help with the expense of caring for a parent, such as Medicare or Medicaid. The website longtermcare.gov provides information and guidance. Additionally, veterans benefits may also assist in long-term-care needs (in particular, check to see if veterans benefits may impact Medicaid benefits in your state.)

Tax breaks may also be available. If a parent lives with you for at least six months, you may be able to to claim a dependent-care credit on your income tax return.

Additionally, the National Association for Area Agencies on Aging runs an eldercare locator at www.eldercare.gov to help people connect with local resources, including transportation, in-home services and locating affordable housing.

Bailey plans on tapping into Medicaid since her father’s financial resources will last for only a year.

“We only have enough money to cover long-term care for a certain amount of time,” she said. “It’s been an emotional journey, to say the least.”

Jeff Wuorio lives in Southern Maine, where he covers personal finance and entrepreneurship. He may be reached at jwuorio@yahoo.com and his website is at jeffwuorio.com.