After publishing my piece on the shocking cost of eldercare, a question kept nagging at me that I couldn't shake: when money is finite and the people you love are not, how do you decide who to help or save first?
A $230,000-a-year group home in Hawaii for one person. Four parents to potentially care for. Two children still in school. A wife. And a version of FIRE retirement that is starting to look a lot less like freedom and a lot more like a second career with no salary.
This is the financial dilemma I'm facing right now, and I suspect some of you are somewhere on the same spectrum, even if the dollar amounts differ.
The Numbers That Started This Conversation
As I detailed in my previous post, a single conversation at the pickleball courts changed how I think about eldercare costs entirely. A man told me his 94-year-old mother was in a group home costing $18,000 a month, and that before the move she had been receiving 24/7 in-home care at $35,000 a month.
For four parents, using a conservative $230,000 per year per person and assuming 5% annual cost increases, the total realistic bill over a three-to-five year care window lands somewhere between $3 and $5 million. That's enough to fund a 30-year retirement for most couples and enough to set multiple children up for life.
Every dollar I direct toward my parents is one less dollar for my children, my wife, and our own future security.
Parents Can Break the Cycle of Dependency
Before getting into frameworks, there is a principle worth stating plainly. If you love someone, you want them to be financially independent from you. You would not want your spouse entirely dependent on you for survival. The same logic extends to your children, and it should extend to your own later years as well.
If you are a parent reading this and are under 50, one of the most meaningful things you can do for your children is to begin saving intentionally for your own retirement and eldercare so they do not have to face that responsibility on your behalf. The time to act is not when cognitive decline arrives. It is today, while you still have time, health, and earning power on your side.
Another option is long-term care insurance. After publishing my post, I learned my parents have coverage for up to three years. They hold a primary policy with Allianz and a smaller one with MetLife. Combined, the policies provide about $330 a day for up to three years. However, there are conditions before benefits are paid.
A physician must certify that the parent can no longer perform at least two of the basic activities of daily living, such as feeding, dressing, bathing, or transferring out of bed.
Once eligibility is confirmed, there is a waiting period of about 100 days before benefits begin. This period functions like a deductible, which can be difficult, especially given that some policyholders may never fully utilize the benefits.
Beyond long-term care insurance, another way to help offset the financial burden is through life insurance. A sufficiently long-term or permanent policy can provide a payout that helps reimburse loved ones who supported your care.
This was not something I had fully appreciated before. But in hindsight, I am grateful my wife and I secured matching term life insurance policies through Policygenius. Please do the same before you get too old and policies become too costly.
For those already in the sandwich generation, the question is no longer whether to prepare, but how best to allocate the resources we have.
Three Frameworks for Thinking About It On Who To Save First
There is no universally correct answer to this dilemma. But there are three distinct ways to approach it, each grounded in a different value system. The frameworks reminds me of two posts you might find helpful regarding the best order to fund retirement accounts for traditional retirees and the early retirees' guide to funding retirement accounts.
The Practical Approach: Children, Yourself, Parents
This framework prioritizes whoever likely has the most life ahead of them and the most time to compound the benefit of your dollars.
Children first. They didn't ask to be born, so you had better take care of them until they are adults. Fully fund their 529 plans where possible. Help them open a Roth IRA once they have earned income. Contribute to custodial accounts. But resist the urge to give them everything. Agency and motivation matter as much as capital. Children who learn to earn and manage their own money tend to build more lasting wealth than those who inherit it passively.
Yourself second. You cannot help anyone if your own finances collapse. Max your 401(k). Build passive income. Achieve enough financial security that your own children never face a repeat of this exact conversation in thirty years.
Parents third. Whatever remains goes toward their care, home maintenance, physical therapy, travel, and quality of life. The hope is that after 40+ years of investing through a historic bull market has given them a meaningful foundation to draw from. Their pride in self-sufficiency is real and worth honoring.
A reader mentioned in my previous post on eldercare: “I would not bankrupt myself or my children for my parents, nor would they want me to.” Your parents, if they love you, do not want to be the reason your retirement unravels or your children's futures shrink.
A sample allocation on $1,000: 45% to children, 35% to yourself, 20% to parents. So you see, all three parties still receive financial assistance. It's not like last place gets nothing.
The Dutiful Approach: Parents, Children, Yourself
You would not exist without your parents. If you genuinely appreciate everything they gave you, including 18+ years of raising, the education they funded, and the foundation they built, then that gratitude has a financial expression.
Parents first. Some adult children take this further than money. They leave careers, relationships, and cities to move home and provide direct care. I understand that pull deeply. I want to be the caretaker for my parents in their own homes, if they will accept me. It’s one of the reasons why I spent so much time and money remodeling their two bedroom in law unit. Either they can stay there or I can stay there to help them. For those who cannot physically be there, redirecting capital is the next best act of filial devotion.
Children second. Since you decided to have children, they are entirely your responsibility. Raising kind, capable, contributing people is also your obligation to society, not just your family.
Yourself last. As a working adult with the highest earning capacity in the three-generation household, you have the most ability to save yourself. Your parents do not, especially if they mismanaged their finances and are already well passed traditional retirement age. Your children are still in school, so their focus should be on education, not making money.
A sample allocation on $1,000: 40% to parents, 35% to children, 25% to yourself.
The Oxygen Mask Approach: Yourself, Parents, Children
Secure your own financial mask before helping others. A financially independent adult is a gift to everyone around them. No one has to worry about you, not even the government. You are free to be generous rather than desperate.
Parents second. They have less time than your children. The cost, while large, is finite. And frankly, giving your parents three years of excellent care costs far less in total than funding a child from birth through college graduation.
Children last. Children do not need fully funded 529 plans or custodial accounts to turn out well. What they need most is time, attention, a safe home, and a parent who has modeled what financial responsibility actually looks like. Most families never open any of these accounts, and their children grow up fine. Teaching your kids to earn their own money and make their own financial decisions is a perfectly sound strategy.
A sample allocation on $1,000: 70% to yourself, 20% to parents, 10% to children.
Our Plan To Provide
My wife and I reached FIRE in 2012 and 2015, so we are largely set. There will be ebbs and flows, but I am confident we can remain unemployed for the rest of our lives. There is also a small chance I may return to work, perhaps at an AI company, given I still live in San Francisco. My wife could also do more preschool teaching after she finishes her online course. If so, this would provide supplemental retirement income.
For the nine years after our children were born, we focused on them. We built up their 529 plans, custodial accounts, Roth IRAs, and most recently invested in private AI venture funds as a hedge against an uncertain job market. As a result, they are on solid footing as well. The VCX listing performed far better than expected. Meanwhile, Some of our earlier venture investments from 2018 and 2022 have some gems, like Glean Tech, Rippling, Together Computer, Harvey AI, and others.
Given this, our focus is now shifting toward preparing for our parents’ eldercare and related expenses. My sample $1,000 will go toward: 60% saving for my parents, 35% to be spent on ourselves, 5% for our children.
A Group Effort To Provide Eldercare
While I estimate a realistic worst-case cost of $3 million to $5 million for four parents, writing about the topic led to productive conversations with my dad, my sister, and my wife, who is strategizing with her sister. I hope you have these conversations too.
What became clear is that this is a shared responsibility. My parents have long-term care insurance that could cover close to $10,000 a month for up to three years. My sister understands the situation and is willing to help, potentially even relocating too, if needed. On my wife’s side, her sister and brother-in-law are also working professionals who can contribute. I just forgot about them because we never see them as they are on the east coast.
My goal is to build a dedicated pool of capital, with a target of $1 million over the next five to ten years in a taxable account. Beyond that, I expect ongoing costs to be supplemented by growing passive income over time, as well as help from my sister-in-law, sister, and parent's insurance policies.
The goal is not to sacrifice everything. It is to contribute meaningfully while preserving the financial foundation for the next generation.
The Bottom Line
Adulting is hard in ways that compound over time. The frameworks above are not meant to give you the right answer. They are meant to help you find your answer, the one that reflects your values, your family's dynamics, and your financial reality.
Whether you go practical, dutiful, or oxygen mask, the worst outcome is having no framework at all, discovering the cost too late, and making panicked decisions with limited options.
Plan ahead. Start a dedicated fund. Have the honest conversations with your parents about their assets, their wishes, and what they want their final years to look like. Consult an elder law attorney. Look into state caregiver programs. Consider long-term care insurance for yourself while you are still young enough for it to be affordable.
And if you are trying to take care of your parents, your kids, and your own financial future at the same time, you cannot afford to be the single point of failure. My wife and I got matching 20-year term policies through Policygenius for exactly this reason. Get covered before life makes the decision for you.
And maybe most importantly, accept that you will probably not be able to do everything for everyone. You can only do your best with what you have. Taking care of family is a team effort. Don't think you need to go at it alone.
Which capital allocation framework resonates most with you, and how are you balancing it against your children's future and your own retirement security? I would love to hear how others are navigating this.
I have a question about life insurance policies. My husband and I both have great policies worth about a million dollars, but they’re tied to our current employers and elected each year during annual enrollment. We’re in our mid-40s. Should we (and others like us) obtain term policies with help from PolicyGenius that are not tied to an employee benefits package?
It depends on how much longer you plan to work, your net worth, and how much debt you have left.
I would get supplemental life insurance and get free quotes through Policygenius.
I find it quite frustrating that those with no savings and/or no family assistance, end up in Medicaid facilities yet those that have saved throughout their lives may end up spending all of their savings and end up in the same Medicaid facility. It is as if they want the majority of us to end up penniless.
It is quite ironic, isn’t it? All paths lead to the same destination, unless you make an enormously larger amount of wealth.
It’s like saving for the 529 plan versus not saving. You end up sacrificing hundreds of thousands to pay full tuition for your kids, while parents who don’t save for college may end up getting a free ride.
That’s life!
Yet another unique perspective on a challenging topic. Both my wife’s parents and my parents are deceased, but we have 5 kids ranging in age 15 to 27. We’re financially in solid and recently retired at age 60 and 58. We see things from a family legacy perspective and we’ve managed to get our first 3 adult children through university and secondary education 100% debt free. Still, they struggle at times with the onus of buying their first house, and even the M word (marriage). They feel that they are behind somehow, but in reality, they are far ahead of they game and are actively saving for retirement. We recently moved to another state (much more friendly to retirees), but we were able to keep the family home of 20+ years. We have no intention of ever selling that home, and even bought a 2 acre property adjacent to the family home that someday we’ll build another house either for ourselves, or for one of our kids and their future family. We’re playing the 100 year game, and believe the idea of the entire family splittering away and going into long term debt is counter productive. What are your thoughts on this idea of keeping the extended family close and pooling financial resources?
I love the concept of compound living, where many family members live to support each other and enjoy each other’s company.
We have this in Honolulu, with three living quarters on one piece of land. The trick is having your own space and figuring out ways for everybody to get along. We all have our own quirks.
My parents are overfunded for end-of-life care, and while I expect to be there for them in other ways, I’m grateful they saved enough to cover their costs, and I will pay it forward by not becoming a financial burden to our kids. I haven’t bought LTC for ourselves because I think we are better off self-insuring. Also, our kids are already funded enough for undergraduate and a car. I’m not sure I want to give them more, as I don’t want them to become entitled and not develop an intrinsic work ethic. The real wrench for us is my in-laws, and I don’t know how to feel about their lack of savings. They put us in a different position relative to my parents, and I don’t feel like we have boundaries in place for how much we will do, or a commitment from the siblings-in-law to help. I feel like I have to play defense in other areas of life in case their care drains us. For example, much of my savings is illiquid between real estate, retirement accounts, and funds, and I’ve saved for the kids in 529 plans and now UTMAs, so their money is in separate buckets as well.
“ The real wrench for us is my in-laws, and I don’t know how to feel about their lack of savings. They put us in a different position relative to my parents, and I don’t feel like we have boundaries in place for how much we will do, or a commitment from the siblings-in-law to help.”
I hear you. This gonna be a huge problem if one set of parents are not financially responsible. This is why it is important to evaluate the family. In addition to the person you wanna marry or be with.
My in-laws are poor. So it is up to us and my sister-in-law to take care of them. We want to take care of them. It’s it’s just not something I baked into my FIRe number before retiring.
I have a similar situation with my in-laws. My father in-law had the money and the means to care for his wife and himself but gambled and lost millions in the stock market game. He lied and kept this from his family until recently when he hit rock bottom and was in massive debt. He is lucky he has a supportive daughter and son that have helped him (not financially) navigate this. My mother-in-law had no idea and is a victim in all this (but that’s what happens when you are not involved with you own finances). I haven’t discussed the future with my wife, but in my mind, I will not sacrifice my kids future money, or our retirement money to help my father-in-law when things get bad. I’m on the fence about my mother-in-law. As John Wick once said: “consequences”. I’m hoping my wife and brother-in-law will agree with me but we’ll see.
Excellent article.The cost for elder care is astronomical. Recently, spoke to an individual who was managing his father’s finances. He explained he had $650,000 in laddered CD,s and the cost for his father’s nursing home was $9000 a month. He added that his father was in good health and was very active. The point that stood out is that felt he was going to run out of cash before his father passed and didn’t know if he was the right thing in regards to the financial aspect.
That sounds about right. Hopefully the father has more than $650,000 invested that can return a higher amount.
$9000 a month is a normal cost of these days. So if all he has a $650,000, he might run out within six years if his children don’t help.
Prices quoted seem high. In my area average cost of assisted living $5000 per month while independent living maybe $3000 a month for 1 bedroom.
What’s your area?
Sam is giving you accurate numbers for hcol areas.
Thank you for your post, Sam. I think it’s wonderful that your last post on ‘Eldercare’ sparked a conversation within your own family, and you discovered there were more potential resources available for your parents’ care. You and your wife may want to look into long term care insurance policies for yourselves, as premiums are less expensive when you open a policy when you are younger (maybe consider this when you are in your 50’s).
The ‘sandwich generation’ is definitely peddling as fast as we can when it comes to planning for our kids, parents and ourselves
We definitely will be looking at the cost of LT insurancein our 50s. Based on a quick review of my parents long-term care insurance plan, there are a lot of hoops to jump through. A 100 day grace period before payments kick in after getting approved, it’s pretty annoying. If it cost $20,000 a month for care, then we all would have to fork over $60,000 before getting any type of relief.
In general, I’ve had negative experiences with insurance companies. Most recently, when I got overcharged by $20,000 for a 10 year term life insurance policy that I thought automatically stopped if I didn’t opt in.
My insurance company ended up jacking my raid from about $40 a month to $750 a month initially and then to $850 a month. It was Haiwei robbery and they only reimbursed me two months. It is obviously my fault and responsibility that I kept on paying because I was on auto deduct. But still, raising my rate by 18 X is absurd.
I agree that LTC policies are imperfect. My parents both purchased policies in their 50’s when they first were newly introduced (i think in the 90’s). The 90 day waiting period when they made a claim was definitely annoying and expensive, but having the policy made a difference with my dad’s care. He was a memory care patient — he was in a small, veterans group home for several months, then at home with part-time care, moving to 24/7 caregivers for several months before he died. The insurance did not come close to covering all the costs, but it made it ‘doable’ for him to receive quality care.
I think of long term care policies like I do earthquake insurance. The coverage is minimal, but helps avoid total loss.
Thanks for sharing. Just to clarify, you had to wait for 90 days for the long-term care insurance to kick in for your father? And then your father passed away several months later after the long-term care insurance kicked in?
Do you recall how much memory care cost a month for him? Thanks for the color.
I love my parents but they did the bare minimum for me financially. I grew up with a serious scarcity mindset and the psych receipts to show for it. I paid for almost all my expenses save for living starting in high school. By college I was completely on my own. One time in college I asked them for a $800 bridge loan, and my mom forgave it. She did the best she felt she could do for me. I suppose my dad with his hang ups around money thought I had it better than he did. Debatable if I’m being generous. They can pound sand if they think I’d help them before I helped myself and my kids. I would help them if I had things sorted for me and mine first.
Thanks for your candid feedback, Justin. I really appreciate it. It is definitely one of those things where the nicer parents are to their children and supportive, the more their children will be supportive with their parents. So it’s a message to all parents, especially the ones who might be struggling, to show as much love, care, and empathy towards their children as possible. For one day, you might need their help.
I love this reply. Not because it’s directed to me, lol, but because you are maybe the only financial blogger/personality I know who spends time on this concept of generational attachments and relationships that shape our lives and that pay dividends or collect a tax as we age. I’ve also always appreciated your perspectives on heritage and culture layered on top of these dynamics—for you your Asian heritage. Too many shy away from stereotypes they feel are damaging or could damage their reputation. Stereotypes don’t apply to everyone but they do exist to help us make sense in generalities.
Thanks for this very important issue. Clearly one family can’t do it all alone, specifically for the aging parents.
One issue I would like to clear up. You suggest funding for your children, including your own, to include ROTH IRA’s. IRS told me they look for W-2’s and/or 1099’s that show earned income that is used to fund a ROTH-IRA. They are very specific in that “earned income” means from a job that pays social security tax, not investment income. So unless a child earns income say as a film star, s/he is highly unlikely to have earned income from a job. So a ROTH-IRA is normally impossible for a child until s/he is of age to do paid work.(If the parent hires their own child and prepares a W-2 or 1099 for the work, there are also rules that they may not need to file ss tax).
Thanks anyway for all the work you do to research statistics that verify your info.
Kids – self – parents. I am in line with your practical approach.
I think we’re all lucky if our parents do well enough for themselves that we don’t have to pay for their later years. I don’t expect them to leave any more money to us kids than it takes to bury or cremate them.
I’m not a big fan of the idea/phrase “children didn’t ask to be born”. Children are a gift from God and having children is necessary for civilization to continue.
It is interesting how this is a philosophical issue as much as a financial issue.
There is a school of thought that says parents gave life to the child, so the child owes a debt to the parents for that gift. No monetary payment can truly repay the gift of life, but the debt can be paid forward by having children of one’s own.