COMMENTARY

Inflation Is Squeezing the Sandwich Generation into Paninis

• by Corinne Casagrande , 98 minutes ago

Rising costs put pressure on the sandwich generation, defined as adults who have a parent 65 or older, and are either raising a child under 18 or providing financial support to an adult child.

More than half of U.S. adults aged 40 – 49 find themselves sandwiched between an aging parent who needs their time and children who need their time and financial support.

Sandwichers in their 50s and 60s are more likely to be helping an adult child financially, in addition to caring for an aging parent. Spread over these three decades, 23% of U.S. adults fit the sandwich generation description, per Pew Research Center.

The sandwich generation spans 30 years in age because financial independence for young adults is coming later and later. Only about a quarter of young adults are financially independent by age 22 (Pew).

Parents stepping in to help with recurring expenses like rent, bills and groceries, or simply continuing to provide those for adult children still living in their houses, are disproportionately affected by price increases. Inflation in services like rent tends to be sticky --  prices don’t tend to go back down.

With rent up about 6% in the past 12 months, higher rents could result in more time with adult children in the house, or a longer timeline of supplemental support.

It's not just first apartments that are more expensive to live in.  The cost of senior care facilities is rising as providers struggle to staff and deal with the higher costs of supplies like food.  The cost of nursing homes and adult daycare services was up 4.8% in August, per CPI numbers.

Middle-income seniors may increasingly find themselves looking to the sandwich generation for help. NORC and the University of Chicago just released an update to their “Forgotten Middle” study, predicting that by 2033, more than 11 million seniors aged 75 and over may not be able to pay for assisted living, but will also not qualify for Medicaid.  These seniors on a fixed income will also have to look to family for care and potentially a roof over their heads.

Beyond the financial burden, caregiving for aging parents and children is a source of significant stress, especially as sandwich caregivers try to balance work responsibilities.  In families with children under 18, 62.3% of families have both parents working (per 2021 BLS data)  and balancing childcare. Add on doctors’ appointments and other duties of care, and the most unaffordable asset is a caregiver’s time.

When marketers look at dual-income households in their data and identify parents with children that can still be on their health insurance, we should consider that the household budget and discretionary income are more stretched than it can appear. This year, sandwich ingredients are inflated 13.5% at the grocery store, a perfect condition for pullbacks and substitutes. Whether buying lunch for their children and parents, sandwich generation caregivers are looking to save wherever they can.

This concept of time savings and money savings are key factors for marketers to remember when developing plans to reach this sandwich generation.