The impact of cognitive decline on the Sandwich Generation

Health care

The magnitude of caregiving can be greater than the cost of paying for college, but families rarely plan ahead for long-term care.


Caring for a loved one with cognitive decline can be difficult for anyone, but those in the Sandwich Generation face a unique set of challenges.

Almost 30 percent of adults in the U.S. have a child under the age of 18 at home, and 12 percent of those parents are also providing unpaid care for an adult, according to Pew Research. This group of people, typically between the ages of 30 and 59, make up what is known as the Sandwich Generation and provide physical, emotional and financial support to multiple generations simultaneously.

These competing responsibilities are not only the source of personal stress for multi-generational caregivers, but the trade-offs they have to make when juggling these responsibilities have left many in a financially precarious situation.

A study commissioned by RBC Wealth Management–U.S. and conducted by Aon, called The Financial Impact of Cognitive Decline, provides perspective on the financial squeeze the Sandwich Generation is feeling. The study was based on feedback from 1,000 caregivers of individuals with cognitive decline, including 253 caregivers under 60, who also have children.

The study found 36 percent of respondents left the workforce early to juggle caregiving and family life, and 60 percent of the Sandwich Generation dedicate a minimum of 40 hours per month to caregiving.

“Many of our clients are part of the generation affected by caregiving for people with cognitive decline,” says Ann Senne, RBC’s U.S. chief administrative and integration officer. “It’s becoming increasingly clear that they need support.”

Calculating the financial impact

As Sandwich Generation caregivers make difficult choices to fit in all their responsibilities, many face severe disruptions to their own retirement plans, as well as their current income.

“We were surprised so many caregivers we interviewed for our survey were in the younger generation,” says Angie O’Leary, head of Wealth Planning at RBC Wealth Management–U.S. “Because of the length of survivorship with Alzheimer’s and dementia, it’s a long-haul decline. For caregivers in this younger age group, that often means taking leaves of absence, making career changes, maybe turning down promotions, and that puts pressure on retirement savings and the ability to keep saving for retirement.”

Of course, earning less has an impact on the present as well as on the future, Senne says. That’s because the caregiver who cuts back on hours or takes a leave of absence is also contributing less to Social Security, contributing less to retirement savings and possibly missing out on employer-matching contributions to a retirement account.

In addition to thwarting retirement plans, caregivers often have out-of-pocket spending as they help to cover the patient’s household bills, paying for groceries, meals, gas and sitters. On average, most caregivers have out-of-pocket costs of about $748 per month and that goes up to $906 per month for the Sandwich Generation, according to the RBC Wealth Management study.

“For families who have wealth, caregiving for an adult with a long-term illness can be a big risk factor especially as they approach retirement,” O’Leary says. “The typical Alzheimer’s patient lives about eight years from diagnosis, and factoring in the cost of care along with what the caregiver will spend, including the disruption to careers, it can be a hit of $750,000 to their portfolios. The magnitude of caregiving is greater than the cost of paying for college, but rarely are people planning ahead for caregiving like they are for a child or grandchild’s tuition.”

Five ways to provide care and look after yourself

For many faced with parenting their own children and assisting a parent or older adult with cognitive decline, “the default response is to think, ‘I have to quit my job to manage all this,’” Senne says. “But that’s not always the only choice.”

While the responsibility of caregiving can be overwhelming, there are options and help is available. Those who are currently feeling the Sandwich Generation squeeze—or want to plan ahead for that possibility—can start with these steps.

1. Talk with your financial advisor. Your advisor is prepared to help you plan financially for the future, including for long-term care events. Your advisor can also help you develop a wealth plan that includes the possibility of becoming a caretaker and think through the impact of your decisions as a caregiver over the long term.

2. Ask for help. Even if it seems like you may have to quit your job or reduce your hours to manage caregiving responsibilities, that’s not always the case. Sometimes it makes more sense from a long-term perspective to pay for a sitter than to give up working or cut back at work.

Start by letting your employer know you’re a caregiver and find out if they offer benefits for caregivers. For instance, RBC provides drop-in adult day programs and flexible family leave. Consider asking for what you need, such as the opportunity to telework on a regular or occasional basis. “COVID showed we can be really effective working remotely and with a flexible schedule,” O’Leary says.

Along with your employer, take advantage of family members, neighbors or community groups that can help share responsibilities or provide other services. “It’s OK to ask for help,” O’Leary says. “Nobody can do this all alone.”

3. Consider long-term care insurance. A typical dementia patient will spend three years at home after diagnosis and then five years in a long-term care community. The costs of skilled nursing care represent a large portion of the overall costs of caring for a person with cognitive loss, so long-term care insurance can be financially lifesaving. Take time to talk with the older adults in your life about long-term care insurance.

4. Communicate with older family members in advance. If a parent or other older relative has been diagnosed with dementia, or even if they haven’t, it’s a good idea to talk with them about their desires for managing their care preferences and ensuring they have a health care directive. When you’ve discussed your loved one’s wishes, you can make decisions about their care with confidence, because you know the decisions you’re making reflect what they wanted, Senne says.

5. Take care of yourself. Just as an airline passenger is instructed to put on their own oxygen mask before helping others, a family caregiver must also take care of themselves in order to do a good job caring for others.

“Many caregivers end up with health issues because they aren’t taking time for proper sleep, exercise, nutrition, but you can’t be your best self for others if you’re not taking care of yourself,” Senne says. “The caregiver is often the type of person that puts themselves last. It is really important to carve out time to care for yourself so you can take good care of your family members.”

RBC Wealth Management, a division of RBC Capital Markets, LLC, registered investment adviser and Member NYSE/FINRA/SIPC.

Let’s connect

We want to talk about your financial future.

Related articles

Could rising health care costs compromise your retirement plans?

Health care 6 minute read
- Could rising health care costs compromise your retirement plans?

Projecting the real cost of health care in retirement

Health care 3 minute read
- Projecting the real cost of health care in retirement

How to plan your health care and life expectancy

Health care 3 minute read
- How to plan your health care and life expectancy