While they’re still providing for their own children, they’re often also providing care for their aging parents. This is why so many experts have taken to calling people in their 40s and 50s “the sandwich generation”: financially (and emotionally), they’re sandwiched between two different groups, both of whom are dependent on them.
Caregiving is emotionally taxing even in the best of times, and doing so while also trying to raise a family, or help a young adult child go out into the world, can be extremely stressful. Add in the need to save for one’s own retirement, and the demands can be downright overwhelming.
People in this age group need ways to make sure they don’t neglect their own financial futures through caring for the people around them. Here are a few tips.
Have an honest conversation with your parents about the state of their finances.
You can’t make a plan if you don’t know what you’re planning for.
As soon as you can - preferably, before your parents get to the point when they need full-time care - sit down with them for an honest discussion of their financial state.
Do they own their house, or do they still pay a mortgage?
How much do they have saved for retirement?
Do they have long-term care insurance?
Have they saved for medical expenses?
Do they have any assets they’re looking at selling?
Even though it may be a difficult conversation to have, you will all feel much better and achieve greater peace of mind if you all know what kind of funds are available.
You may find that you’ve been worrying unnecessarily about paying for long-term care, as your parents have an ample savings account dedicated to those costs. Or you may find that you need to start making a plan together as to how you’ll cover that cost, should the need arise.
Ask your financial advisor about all the options available to you and your parents.
There are often financial options available that you may not be aware of. Life settlements, for example, have helped thousands of families pay for the care that they need.
In a life settlement, a senior sells his or her unwanted life insurance policy to an institutional investor for more than the policy’s cash surrender value. This allows them to access immediate liquidity, transforming an asset that was previously a burden into a source of financial relief.
We’ve helped countless families complete these transactions, relieving a major financial burden and allowing them to get back to what really matters: enjoying their time together as a family.
Be flexible about when you plan to retire, not about how well you prepare for it.
Despite the increased longevity we’re all experiencing, many seniors still expect to retire at age 65. What are your expectations for your own retirement? If life expectancy continues to go up, as many expect it will, it probably doesn’t make sense to plan to retire at the same age your parents and grandparents did.
This is especially true if you’re raising your family and paying for long-term care for your parents at the same time. It may be tempting to dip into your retirement fund or stop making your monthly contributions in order to make up some of the difference, but avoid doing this at all costs. You’ve got to plan well for your retirement - otherwise, your children will find themselves having to help you financially when you get into your senior years.
Instead of putting off your monthly contributions, consider adjusting your expected retirement age. This will allow you to save a little less each month for retirement, while still staying on track to have the money you’ll need when it’s time to leave the workforce.
Being a member of the sandwich generation isn’t easy, but planning well and thoroughly can allow you to save for your own future, while still meeting all your current financial obligations. For more, read “Finance Tips for Families Supporting Aging Loved Ones.”