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Key Takeaways
- Many Millennials and Gen X are in the “sandwich generation,” managing the costs and responsibilities of raising their children while also taking care of their aging parents.
- Caregiving for both kids and parents often means retirement savings are cut, with over half of the sandwich generation reducing or stopping their savings during prime earning years.
- Sticking to traditional personal finance rules like building an emergency fund, taking advantage of an employer match, and budgeting can help you stay on track for your own retirement.
As Millennials and Gen X settle into middle age, they will be caring for their young children and their aging parents. Not only can this be emotionally and physically taxing to manage simultaneously, but it can also be detrimental to their finances.
According to the 2025 Annual Retirement Study from Allianz Center for the Future of Retirement, this “sandwich generation” is putting their own retirement planning on hold, often cutting or halting their savings to keep up with the costs of children and elder caregiving.
The Sandwich Generation Is Bigger Than You Think
Approximately one in four Americans falls into the sandwich generation: caring for a child under 18 and an aging parent. Of this group, 78% are giving their parents either physical, financial, or emotional support, and three-fourths say that it’s difficult to balance their own finances with caregiving needs for their children and parents.
The result of these responsibilities is that more than half (59%) have reduced or stopped contributing to their retirement accounts, and 76% say that providing all of this care is like a full-time job.
Sandwich Savers Are Missing Out Big Time
Missing even a few years of retirement savings can be a huge loss, as savers miss out on compound growth. This can be especially detrimental for those in their prime earning years, which often happens in middle age, such as Gen Xers and millennials are approaching.
Around 46% of Millennials are part of the sandwich generation, and 18% of Gen X. For households already managing rising housing costs and inflation, retirement savings are often the first to go.
7 Smart Strategies to Save for Retirement
While it may be difficult to manage finances while caring for children and parents, it’s important not to lose sight of your own retirement and ensure you’re setting yourself and your family up for long-term security.
Here are a few tried-and-tested rules you can follow to help keep your retirement planning on track.
Save 15% of Income
Common financial advice is to put aside about 15% of your gross income for retirement. If 15% is too high with the costs of caring for children and parents, start where you can, even if it’s 2%.
50/30/20 Budget
Budgeting is a key tenet for a healthy financial profile, and this rule helps keep budgeting simple without having to crunch a lot of numbers. It stipulates that 50% of income goes to needs, 30% to wants, and 20% to savings and debt repayment. Again, if 20% seems like a lot for savings, adjust the number, but keep it as a line item, not a throw-away category.
Use Your Employer Match
If your job offers a retirement plan, such as a 401(k), it may also come with an employer match component, meaning your employer will match whatever you save up to a point. This is essentially free money that you shouldn’t leave on the table, so contribute to a work retirement plan at least up to this much, and more if you can.
First, Build an Emergency Fund
Life is unpredictable: Accidents, job layoffs, and more can surprise your wallet, so it’s good to be prepared for life’s curveballs. Having an emergency fund, totaling three to six months of expenses, can help you manage unexpected costs or loss of income. An emergency fund prevents you from using long-term savings or taking on debt.
4% Withdrawal Rule
This guideline gives you an idea of how much money you can withdraw every year in retirement without running out of funds. Working backwards, you can also use it as a savings target.
Annual Updates
Life constantly changes with new children, kids going off to college, parents passing away, and more, so it’s wise to regularly update your budget and savings plan to check that you’re on the right track.
Seek Support
Managing your own finances, the life of your children, and helping your aging parents is a lot to take on, but you don’t have to do it alone. Financial advisors are always available to help you make sense of your different responsibilities and build a plan that’s straightforward to follow. And make sure to look at employer benefits, tax credits, and government programs that can help ease the burden.
Important
If your employer doesn’t offer a 401(k), it’s still smart to save for your retirement by using other tax-advantaged retirement plans, such as traditional or Roth IRAs.
The Bottom Line
Balancing the needs of kids, parents, and your own future isn’t easy, but it doesn’t have to be impossible. Even small steps, like saving what you can, sticking to a budget, and leaning on support, can make a huge difference over time.
The important point is not to disregard your own financial security while taking care of others, because the stronger your foundation is, the better you’ll be able to support your family now and in the future.
