Supporting the Sandwich Generation: A Guide for 401(k) Plan Sponsors
Supporting the Sandwich Generation: A Guide for 401(k) Plan Sponsors – Employees in the sandwich generation, juggling the financial responsibilities of supporting aging parents and dependent children, often struggle to focus on their long-term financial goals. Plan sponsors are in a unique position to assist this group by offering targeted financial wellness resources and plan features designed to ease their financial strain. Here’s how employers can better support this vital segment of the workforce and help them pursue a more secure retirement.
Recognize the Financial Pressures Facing the Sandwich Generation
According to the Pew Research Center, nearly one in four U.S. adults belongs to the sandwich generation. These individuals face financial pressure from multiple directions—balancing the costs of raising children, funding college, and providing care for aging parents, all while trying to save for their own retirement. This financial strain often leads to increased plan loans, hardship withdrawals, and lower overall retirement savings.
Provide Tailored Financial Guidance and Support
Plan sponsors can strengthen their financial wellness programs by offering personalized coaching that covers budgeting, debt management, and multigenerational financial planning. Providing employees with access to financial advisors or digital tools that help them navigate competing financial priorities can help lead to stronger long-term financial outcomes. Research from the Employee Benefit Research Institute (EBRI) shows that holistic financial planning resources increase employees’ confidence in their retirement readiness.
Build Flexibility Into Plan Design
Offering after-tax contributions, Roth options, and in-plan emergency savings accounts gives employees greater flexibility to manage their cash flow. Plan sponsors can also use SECURE Act 2.0 provisions, such as matching student loan repayments and adding emergency savings features. These plan enhancements help employees balance immediate financial needs while continuing to build toward long-term retirement goals.
Offer Dedicated Benefits for Employee Caregivers
Employers can provide resources such as eldercare navigation services, dependent care flexible spending accounts (FSAs), paid caregiver leave, and financial tools. Including these benefits in wellness communications demonstrates understanding and support for employees’ caregiving responsibilities while helping reduce stress-related turnover.
Track Engagement and Drive Ongoing Improvement
Leverage plan data and employee feedback to evaluate the impact of financial wellness programs targeting the sandwich generation. Monitor key metrics such as participation rates, increases in deferrals, and loan activity to pinpoint challenges and adjust offerings to better meet employee needs.
Conclusion
Plan sponsors have a unique opportunity to support the often-overlooked sandwich generation. By customizing financial wellness programs, benefits, and retirement plan designs to meet their specific needs, employers can alleviate stress, increase engagement, and help employees pursue better retirement outcomes.
This is intended for informational purposes only. You should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment advice from Savant. Please consult your investment professional regarding your unique situation.
Patricia L. Hutchinson
Director of Retirement Plan Services
AIF®, MBA