Sandwich generation caregivers, which is defined as those who support their children and elderly parents at the same time, often describe a state of chronic fatigue as they juggle the demands of family responsibilities.
But caregivers who are stretched thin, especially when they were forced to exit the workforce prematurely, also often experience a financial squeeze that can wreak havoc on their retirement readiness. The degree to which depends on the type of help they provide.
Some bring aging loved ones into their home permanently and provide daily care, while others help out temporarily during periods of illness or recuperation. Caregivers may also provide monetary assistance — subsidizing their parent’s living expenses, paying down their debt, covering medical bills, and helping them manage their financial affairs.
Consider:
- A 35-year-old adult who provides $2,000 per month to an aging parent for 10 years would have spent $240,000 in cash in the form of financial assistance.
- Had the adult child been able to invest those dollars in a mutual fund that achieved an average annual return of 6 percent instead, they could have amassed roughly $330,000 in savings over the course of that decade.
The long-term financial implications are greater still. By depriving those dollars of a chance to deliver average annual total returns of 6 percent over the next 20 years until they retire, the adult child would have lost the opportunity to accumulate more than $1 million— money that could have been used to fund their retirement or finance other goals, like buying a house (a potentially appreciating asset) or paying for their children’s college education.
What is the cost of caregiving?
According to the latest research from AARP, some 63 million Americans provide care for an adult age 50 or older, a number that is on the rise as the population ages, the long-term care system experiences workforce shortages, and states double down on efforts to facilitate home- and community-based services for aging adults.1
The prevalence of caregiving for an adult family member has climbed nearly 50 percent since 2015 among all racial/ethnic groups, educational levels, work statuses, genders, and nearly all generations, primarily among millennials, Generation X, and baby boomers.2
The average family caregiver spends roughly $7,000 per year in out-of-pocket expenses, a number that can spike to $12,000 annually for those who live an hour or more aware from the care recipient, according to the AARP.3
The caregiver role can also affect income potential, especially when adult children trade in a more demanding (and more lucrative) career for one that permits them greater flexibility.
Women are at greater risk of experiencing the financial backlash of caregiving. Statistically, they are more likely than men to step out of the workforce to care for their aging parents. That reduces both their household income and retirement savings, which puts them disproportionately at risk of outliving their savings as they age, especially for those who are single. According to the National Alliance for Caregiving, some 61 percent of all caregivers in the U.S. are female.4
Life insurance for parents
Adult children might also consider purchasing permanent life insurance on their parents. Such policies can make it possible for adult children to support their parents and even put their career (and income) temporarily on hold while they provide care, knowing that the costs they incur will be replenished when their loved one passes away.
Protect your own financial security
As you reach out to assist your aging loved one, be sure to stay focused on your own financial security as well. Manage your expenses, where possible, so you can continue to fund your retirement account. Maintain an emergency fund worth three to six months of living expenses. And avoid cosigning on a mortgage (or any loan) for your parents, which would become your responsibility if they should fail to pay.
And before you peel off a portion of your income to help your aging parents, be sure they are taking advantage of all discounts and tax credits for which they may qualify, including prescription drug discounts, food assistance programs, housing vouchers, property tax and utility bill assistance, and Supplemental Security Income, which is offered to seniors 65 and older who have limited income and assets.
Medicaid also provides help paying Medicare premiums, plus additional health benefits beyond Medicare, to seniors with limited income and assets.
Conclusion
Most who support their children and aging parent at the same time do so willingly, but caregiving comes at a cost. To minimize impact to their financial well-being, sandwich generation caregivers should explore all possible programs for which their senior parents may qualify, set expectations early, and stay focused on their own financial goals.
1 National Alliance for Caregiving and AARP, “Caregiving in the U.S. 2025,” July 24, 2025.
2 National Alliance for Caregiving and AARP, “Caregiving in the U.S. 2025,” July 24, 2025.
3 AARP, “Family Caregivers: Is a Personal Services Contract Right for You?” Oct. 31, 2022.
4 National Alliance for Caregiving and AARP, “Caregiving in the U.S. 2025,” July 24, 2025.
Provided by Heather Yetman, courtesy of Massachusetts Mutual Life Insurance Company (MassMutual).
©2025 Massachusetts Mutual Life Insurance Company, Springfield, MA 01111-0001
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