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This Is the Biggest Retirement Challenge for Americans in Their 40s and 50s

By John Manganaro

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What You Need to Know

  • More American adults in their 40s and 50s are finding themselves caring for both older and younger family members.
  • The duties of caregiving mean many in this generation are struggling to keep their own financial goals on track.
  • There is a concern that Americans in this age group are quickly falling behind their retirement savings goals, a new survey shows.

Known colloquially as the “sandwich generation,” many American adults in their 40s and 50s are finding themselves caring for both older and younger family members while also struggling to keep their own financial goals on track.

Many Americans in this age band particularly worry that they are falling behind on their retirement savings goal as a result of caregiving responsibilities and day-to-day financial obligations.

This is the topline finding of a new survey report published by Athene, which also shows that, over the last 50 years, the number of people living in multigenerational households has quadrupled. Today, the survey shows, many adults in their prime earning years share their homes with their parents or older relatives — as well as their adult children.

To better understand how the sandwich generation is navigating this life stage and what challenges it may be facing, Athene surveyed parents in their 40s and 50s supporting adult children and aging family members.

Among the group, Athene reports, there is a clear divide on whether offering financial support has affected their own retirement readiness. Specifically, just under half of respondents (47%) reported that they are putting off retirement savings to offer financial support to aging extended family or adult children, and nearly the same amount are tapping into their retirement assets to cover these expenses.

On the flip side, Athene finds, 45% of the group say that supporting their family has not significantly affected their retirement goals or plans for the future.

Across the board, maintaining their standard of living and not having enough assets to retire are among the top concerns identified by Athene’s survey.

Financial Pressure From Above and Below

According to Athene’s summary of the survey results, some 58% of households in this age bracket have adult children at home, and another 76% of individuals financially support them.

“Even with a vast majority of their children having a source of income, parents are helping with a variety of expenses,” the report explains.

This includes 82% helping their kids with daily expenses such as groceries, clothing and cellphone bills. Some 65% offer help with housing expenses; 57% provide insurance coverage of some type; and 53% are helping to fund their children’s education.

Notably, the survey shows 50% of this group are also managing all or a portion of their children’s debt.

The other great source of financial strain for Americans in their 40s and 50s, according to the Athene survey and other reports, is the need to provide care to aging parents. Put simply, the sky-high cost of nursing home care and the unaffordability of long-term care insurance mean even relatively wealthy clients are at risk of serious hardship on this front.

Higher Stress and Lower Retirement Preparedness

According to Athene, the survey revealed that many people in the sandwich generation are balancing career and caretaking responsibilities, adding emotional stress to their list of challenges. For example, while 44% of respondents said the financial strain of caretaking was difficult, 58% said emotional and physical stress was the biggest pain point.

As Athene’s summary explains, among the respondents, 55% made less than $100,000 per year. For this group, they said they were most concerned about their lack of assets to retire, followed by a worry they would not be able to maintain their standard of living once in retirement.

For those who made more than $100,000 per year, 66% of respondents shared this concern of not being able to maintain their lifestyle once retired, but this group was more confident in their ability to take care of their adult children and aging parents successfully.

The study further revealed that many heads of households are serving as a source of financial literacy for their adult children, including helping them open a bank account, explaining credit and debt, and discussing budget management and healthy financial habits.

In looking ahead to their own retirement, 66% of the surveyed group are counting on Social Security as a source of income, followed by 401(k)s and investments, and nearly a quarter of respondents have annuities as part of their financial portfolio, according to Athene.

Photo: Adobe Stock

John Manganaro

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