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Sandwiched: It's turnabout as millennials support mom and dad

  • More than a quarter of households support either an elderly parent or an adult child, Raymond James found.
  • A third of those dipped into savings in order to help out a family member.

More millennials and Gen Xers are being forced to dip into savings to help out the adults in their lives.

More than a quarter of households support either an elderly parent or an adult child, according to a recent Raymond James survey. A third of those have had to dip into savings in order to help out a family member.

Raymond James surveyed 1,000 adults ages 45 to 64 in July.

Rising health and education costs are part of the reason for these "sandwich" situations, the survey found. The term usually refers to parents who find themselves caring for their adult children and aging parents, sometimes at the same time.

"What's different now is the strains are more intense for a lot of households, particularly in the middle class," said Scott Brown, chief economist for Raymond James.

"Wage growth has been relatively stagnant, and we've seen education expenses rise, particularly after the recession."

The Great Recession put pressure on many state budgets, leading to cuts in public education funding. At the same time, it also meant lower yields for the safer assets traditionally sought for those approaching retirement, Brown said.

And caring for children or aging parents has made long-range financial planning more challenging for 40 percent of respondents in a Wells Fargo report from 2016.

Communication becomes even more important in these situations, according to several planners.

"Keep the communication open and flowing with all members of the family," said Patrick Amey, a certified financial planner at Overland Park, Kansas-based KHC Wealth Management.

Couple bills stress
Image Source | Getty Images

That includes any parents or adult children who may be living with you, he said.

"Ensuring everyone understands time constraints, competing priorities, financial limitations and even physical limitations helps get everyone on the same page," Amey said.

Even if you aren't in this situation right now, having a plan and working toward it ahead of time can be helpful, Brown said. That's one way not to be caught off guard when unexpected costs occur.

"It's really important for people to have some sort of plan and know where they can go for help," he said.

Also important, especially for adult children who move back home, is a plan for eventually moving out, said Shashin Shah, a director and certified financial planner at SFMG Wealth Advisors in Plano, Texas.

Expectations are key, he said, because you want to be sure you have the power to help and not be overly burdened.

Monitoring financial responsibility and in some cases collecting rent can be a smart strategy to help your child begin to take charge of their own finances and allow for an easier shift when they start living on their own, Shah said. If the rent is not needed to sustain the household, it can be held and returned when they get on their own feet, he added.

Another obstacle for families in this situation is the negative connotation that often comes with the "sandwich" situation, said Geoffrey Owen, a certified financial planner and senior wealth manager at Charlotte, North Carolina-based GreerWalker.

This shouldn't be the case, he said. It can lead to other benefits, such as forming stronger relationships with your parents or children.