• saving for college, college loans, college financing, college planning

Surviving the Sandwich Generation

A growing number of American families are finding themselves squeezed between multiple competing financial priorities.

Not only do they face the challenges of meeting everyday living expenses, but they're also trying to save for retirement, save for their children's college educations, and perhaps even help care for and support aging parents. Such families have been dubbed the "sandwich generation."

The Pew Research Center reports that 13% of Americans between the ages of 40 and 60 (or nearly one in eight) are raising a child while providing financial support to a parent.* Given that an estimated 44% of all baby boomers have a child under 21 and at least one living parent, this number will likely rise in the future.

The key to dealing with these conflicting financial goals is to set priorities and be prepared to make some sacrifices. Perhaps you can scale down your expectations for the kind of college your children will attend–a public or community college instead of a private school, for example. Or maybe you'll need to plan on working a few extra years before you retire, or scale back your retirement lifestyle expectations.

A common mistake in prioritizing is to let the most immediate concerns carry the most urgency. For many sandwich generation families, helping aging parents tops the list, followed by saving for college and then saving for retirement. Every situation is unique, but in general, saving for retirement should come before saving for college.

This is because there may be other avenues for financing college education, like scholarships, financial aid and student loans. But there are no scholarships or financial aid for retirement– you're pretty much on your own.

* Source: "From the Age of Aquarius to the Age of Responsibility," The Pew Research Center, December 2005

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