Caught Between Eldercare and Childcare? Ways to Manage the Financial Costs, Part 1

By Rev. James Cook, CFP®, RICP®, MMBB Financial Planning Specialist

What’s in This Article:

What is the sandwich generation and what is their financial “squeeze”
Steps for managing dual childcare and eldercare costs
Start with a clear financial plan
Reduce costs with nanny shares and free public options
Maximize tax credits, government benefits, and workplace support

For some families, caregiving follows a familiar rhythm: raising children, enjoying an empty nest, and then caring for aging parents. But today, that timeline has shifted. As people start families later and parents live longer, caregiving has become a dual responsibility for one in four Americans—placing the sandwich generation squarely in the middle.¹

The sandwich generation refers to individuals caring for both underage children and aging parents at the same time—often during mid-career years. ² This season of life is deeply meaningful, rooted in love, responsibility, and faith. Yet it can also bring significant financial and emotional strain. So how can families navigate this financial tension with wisdom, stewardship, and hope? In part one of this two-part series, we share the first of seven strategies.

Understanding the Financial “Squeeze”

What makes this stage so challenging isn’t simply the cost—it’s the convergence of financial demands. Rising childcare, education, healthcare, housing, and long-term care expenses often overlap at the same time.⁴

As a result, many caregivers find themselves making difficult trade-offs—cutting back on work hours, delaying retirement contributions, or relying more heavily on savings and credit.³

This “squeeze” can feel overwhelming. But with thoughtful planning and access to the right resources, families can begin to regain a sense of control. In part one of this two-part series, we cover the first three of seven strategies for managing dual caregiver expenses.

1. Start with a Clear Financial Plan

The first step is clarity. Understanding your full financial picture—including income, savings, debt, and long-term goals—provides the foundation for every decision you make.

If possible, have an open conversation with your parent indicating that you will be assisting to determine what resources they have available to provide for their own care. If you will be helping them with financial and medical care decisions, they should consider naming you as a power of attorney who is authorized to act on their behalf if they become incapacitated.

From there, creating a dedicated caregiving budget that separates child-related and eldercare expenses from your other expenses can help you monitor costs and prepare for future needs.

Equally important is setting realistic expectations. Many caregivers feel pressure to meet every need—often at the expense of their own financial security. ³ Thoughtful stewardship means balancing generosity with sustainability.

2. Reduce Childcare Costs with Creative and Public Options

Childcare is often one of the largest expenses families face—but there are ways to manage it more effectively.

Nanny Shares

A growing number of families who use babysitters are turning to nanny shares, where two or more households share the cost of a caregiver. This arrangement allows families to:

Split wages and payroll costs
Maintain a more personalized, in-home setting
Reduce overall expenses compared to hiring a full-time nanny independently

Nanny shares offer a practical way to balance quality care with affordability.

Free or Low-Cost Pre-K Programs

Some states and municipalities offer public pre-K programs, often at low or no cost depending on eligibility. These programs provide:

Early childhood education
Care during working hours
Additional support services such as meals.

For families with young children, these programs can reduce annual childcare costs.

3. Maximize Tax Credits, Government Benefits, and Workplace Support

Many families navigating dual caregiving responsibilities may not fully leverage the financial support available to them because they are unaware of the full extent of these resources.

Tax Credits and Pre-Tax Tools

Several tax strategies are designed to ease caregiving costs:

The Child and Dependent Care Credit may help offset childcare or caregiving costs. You may be able to claim both a child and a dependent adult with this credit. If your parent lived with you for more than six months in the year and needed a care provider while you worked, some states allow you to deduct a percentage of the cost of this care from your state returns. Ask your tax professional about your state’s tax laws to find out if you qualify.³
The Child Tax Credit can reduce overall tax liability.
The Credit for Other Dependents. Taxpayers with dependents who don't qualify for the Child Tax Credit may be able to claim this credit. They can use it in addition to the Child and Dependent Care Credit. The IRS website offers a questionnaire to help people determine if they qualify for this credit: https://www.irs.gov/help/ita/does-my-childdependent-qualify-for-the-child-tax-credit-or-the-credit-for-other-dependents. ⁴
Dependent Care FSAs allow families to pay for eligible care expenses with pre-tax dollars. While many people use these accounts for childcare, if you claimed your parent as a dependent on your tax return, you may also be able to use FSA pre-tax dollars for adult daycare or home health aide costs. Check with your organization’s HR professional.³
Itemize medical and dental deductions. If your medical and dental expenses were more than 7.5 percent of your adjusted gross income, you may want to speak to your tax professional about whether you qualify to itemize unreimbursed medical or dental expenses paid out of pocket. You will then be able to claim amounts beyond 7.5% of your income. ³

Used together, these tools can improve cash flow and reduce the overall cost of care.

Government Programs

Public programs—particularly for eldercare—can play a critical role in long-term planning. ³

Families may explore:

Medicaid, which may cover long-term care services for eligible individuals.
Medicare, which helps with certain short-term healthcare needs.
Veterans Administration (VA) Services. If your parent is a military veteran who has signed up for VA health care, they may be eligible for long-term care services from the VA. ³

Because eligibility for Medicaid often depends on income and assets, planning ahead can help ensure access when support is needed.

Workplace Resources

Employers are increasingly adapting to meet the needs of caregiving employees. Common benefits include:

Flexible or hybrid work arrangements
Paid family medical leave or unpaid caregiving leave. You’re eligible for up to 12 weeks of family medical leave in one 12-month period.5
Financial wellness tools or employee assistance programs

Taking advantage of these resources can help caregivers maintain employment while meeting family obligations.

Watch for part two of this article next month, where we will explore long-term care insurance, trusts and more.

Footnotes

https://www.pewresearch.org/short-reads/2022/04/08/more-than-half-of-americans-in-their-40s-are-sandwiched-between-an-aging-parent-and-their-own-children/
https://www.marketplace.org/story/2025/01/14/the-number-of-sandwich-generation-caregivers-is-growing
USA Today. “The sandwich generation simultaneously cares for kids and parents—how can they afford both?” (May 2026)
https://www.irs.gov/help/ita/does-my-childdependent-qualify-for-the-child-tax-credit-or-the-credit-for-other-dependents
https://www.dol.gov/agencies/whd/fmla

The information in this article is for informational purposes only. Any third-party links included in this article do not constitute an MMBB endorsement. The information contained herein does not constitute any financial, insurance, investment, legal, or tax advice. MMBB is not liable for any success or failure that is directly or indirectly related to the use of the information contained herein.