Baby Boomers Supporting Kids and Parents

C H I C A G O, Aug. 1 -- Baby boomers make up what's being called the "Sandwich Generation" because people between the ages of 45 and 55 are finding themselves wedged between financial obligations: their children's college tuition, their aging parents' living expenses, and their own retirement savings.

Of the nearly 2,500 boomers surveyed by the AARP, 48 percent thought they should be doing more for their elderly parents. Meanwhile, 69 percent of those polled felt their children should help care for them in their old age, signaling that the next generation will be sandwiched too.

The Social Security Administration estimates 76 million baby boomers will be retiring during this century. Good Morning America's financial contributor Mellody Hobson, president of Ariel Capital Management in Chicago, said the boomers' burdens evolved, in part, because they waited longer to have children.

Strained Resources

"When their children are teenagers and ripe for college, their parents are well into their 70s or 80s, and they need help themselves," Hobson said. So the boomers often find themselves simultaneously looking at college campuses and nursing homes.

The situation is further exacerbated by the fact that boomers tend to be big spenders and have racked up both credit card debt and hefty mortgages, perhaps in defiance of their scrimping and saving parents, who were forced into frugality during the Depression.

"Many boomers live beyond their means, sacrificing their financial futures," Hobson said. "That means children and parents become a strain on already strained resources."

Solving the College Cost Dilemma

The average public college costs more than $12,263 a year, while the average private school costs more than $32,119, creating some hefty bills for parents of college-bound children. But Hobson has some tips for those "sandwich parents" who have kids near college age, or even younger.

Financial Aid: Look into financial aid early, instead of waiting until children are filling out their applications, Hobson said. Long before that, even as early as when the child is age 1, parents should be deciding whether the child will go to public or private school, gathering cost estimates, and determining what they have to spend.