Members of the so-called sandwich generation, Tiffany and Andre Trent, ages 40 and 43, were afraid they would have to choose between taking care of their elderly parents and adopting a child.
People in such a sandwiched situation are simultaneously caring for a minor, or grown, child as well as for a parent age 65 or older. Around 42 percent of Gen Xers and 33 percent of baby boomers fit this profile, according to a 2013 Pew Research report.
It had taken 15 years for the Trents, of Blacksburg, Virginia, to recover financially from cutting short their overseas careers to care for Tiffany's gravely ill father. Childless, they had also been saving up for years to do an overseas adoption. Then Andre's parents became ill.
"We had a big moment of pause," Tiffany Trent said. "My in-laws have no savings, and my mother in Wisconsin is not well. We will probably have to take care of them, so should we take on having our [own] family?"
They ultimately decided to adopt their daughter in 2013.
"We're happy to take care of our parents, but we worry: Can we save for ourselves, and our child and our retirement?" she asked. "It's terrifying to think about."
Cheryl Sherrard, certified financial planner and director of planning for Clearview Wealth Management said such situations "can be overwhelming—not just financially but with time and energy."
She explained, "You put your own needs on the back burner. It's easy to sideline your own planning and saving [and] not realize how much money you're giving to the other generations."
One of the biggest issues for clients of Sean Keating, certified financial planner and principal of Patriot Financial Advisors, is setting boundaries.
"For example, if a grown child moves back home, do you collect rent?" Keating asked. "Tell them 'I can only help out with X amount of money'? Force them to find a job?"
Sometimes we need to set financial boundaries with our parents as well.
Lincoln Pain, certified financial planner and founder of Effective Assets, said he had a client who talked with his mother-in-law about long-term care insurance. "She said, 'I don't want it.' He said, 'It's not for you; it's for me—I don't want to go bankrupt!'"
But being in a sandwich situation can also have a silver lining, according to Philip J. Kiernan Jr., president of Enhanced Dividend Capture Partners.
"If your parents move in with you, you can all save a lot in property taxes—tens of thousands of dollars, depending on where you live," he said. "I think three generations living together is going to be a model going forward."
He added, "I've been seeing more and more of this within the last 10 years."
Financial advisers can play an important role in getting the three generations on the same page, Kiernan said. One way is by coordinating with an estate attorney to hold a family meeting.
According to him, the process is straightforward. A designated "point person" fills out a detailed set of forms on behalf of the family, often with the help of the adviser.
There is an initial meeting with the adviser, an attorney and all family members—even those attending virtually—to state the family's objectives (e.g., protect assets, generate income, etc.).
A second meeting takes place, to implement the plan, discuss items—such as who should be power of attorney and trustee—and review wills and other documents.
"This process leads to a higher chance of success for future family harmony," he said.
Sherrard at Clearview Wealth Management also finds it useful to approach each generation separately.
When it comes to communicating with the oldest generation about financial issues, Sherrard said she can come across as an objective party "because I'm not in a parent/child relationship with them."
For the sandwiched generation in the middle, Sherrard offers education on college-related issues, such as the need to set up a health-care power of attorney and health directive for kids in school. Also covered: how to manage spending expectations, such as private vs. in-state tuition costs, incidentals—e.g., books, spring break, pizzas—and cosigning credit cards.
Sherrard also advises the college students themselves on how to get started in adult life, warning them about credit card offers and helping them understand that if they have money, people will prey on them.
The bottom line is the same no matter which part of the sandwich you are, said Pain at Effective Assets.
"You need to be a money-making machine, setting [aside] 25 percent toward your future," he said. "That's the reality, [and] you need to be doing it if you're 75 or you're 25."