Household Asset Allocation, Offspring Education, and the Sandwich Generation

Abstract

This paper finds households with children and elderly dependents, the “Sandwich Generation,” significantly reduce both college savings and stockholding. Having any elderly dependents decreases the probability of both stockholding and college savings by twice as much as poor personal health. Hence, these results have critical implications as they demonstrate the importance and magnitude of links between the pension system, college financial aid, and wealth accumulation. Elderly dependents limiting parental funds for offspring education can decrease offspring long-term earnings potential via decreased human capital accumulation. Furthermore, decreased stock holdings can decrease long-term wealth accumulation and thus intergenerational wealth transfers.