Why saving for retirement has become a challenge for the "sandwich generation"
Dracut, Massachusetts — Dinnertime at the Gomez residence in the suburban Boston town of Dracut means feeding three generations.
"It's crazy," Alicia Gomez told CBS News of the seven family members who live together under one roof. "We're raising my niece and nephew. My mother lives with us and my sister lives with us."
Alicia, 56, is the chief operating officer for a nonprofit, and her 58-year-old husband Chu Gomez works in logistics. They are part of the so-called "sandwich generation" of workers who support both young relatives and aging parents.
"I equate it to a turkey club sandwich, because a club sandwich has a lot of layers, and we have a lot of layers," Alicia said.
Intergenerational arrangements like this account for roughly five million U.S. households, according to the U.S. Census Bureau. They can easily wreak havoc on retirement plans.
"We were thinking 62, we can retire at 62, and still be young," Chu said. "And the other day she says, 'You're going to work till 70, right?' I'm like, 'I guess so.'"
According to labor economist Teresa Ghilarducci of the New School for Social Research in New York, people in their 50s need to put away as much of their earnings as possible.
"In your 50s, you may be pressured to help your adult children," Ghilarducci said. "You may be pressured to even help your older parents. But don't sacrifice your own retirement savings."
The Gomezes are saving, but they are also more than $500,000 in debt, including house, car and college loans for their two daughters.
Chu doesn't expect to have those college loans paid off until he's 71.
"Yeah, we'll have those for a long time," Chu said.
While the Gomezes have a nest egg, it's not a big one. For those in their 50s, there are several variables to consider. They include having honest conversations about how long any assistance for relatives, such as older children, will last. Other options to consider: temporarily reducing retirement contributions to pay down any high-interest debt, like credit cards. Then, importantly, boosting savings.
Alicia says the couple makes enough money to cover their bills.
"We have enough, but it's not where we should be," Alicia said. "God forbid, if one of us gets sick or we are laid off, what will that do to us financially?"
Both Alicia and Chu were in fact laid off in their 50s.
"Well, people in their 50s have a really high chance of losing their career job," Ghilarducci said. "So, watch your back, keep your job."
Alicia picked up consulting work and then was rehired, but it took Chu six months during the pandemic to find a new job.
"When you get laid off...you can't do the 401k," Chu said. "So that was six months of 401k that was not being put in there."
During that period, Chu missed out on $13,000 in 401k contributions, which would have been worth roughly $40,000 by the time he retires, according to calculations by John Kelley and the CBS News data team. That could have helped cover some retirement costs, like health insurance. On average, a retired 65-year-old should expect to spend a total of about $165,000 on health care throughout retirement, according to a Fidelity survey.
The retirement pressure never lets up for the Gomezes.
"We didn't know we were going to have to care for so many family members," Alicia said. "So, the unexpected...was a wake up call...for us."