"Sandwich Generation": It's the term coined to describe adults who are caring for both children and aging parents. It's an apt description, as members of this generation likely feel quite the financial squeeze when juggling the costs of raising children with those of caring for elderly parents. For members of the sandwich generation in particular, retirement strategies can take a back seat to more immediate financial concerns.
But neglecting your retirement savings can cause you financial stress in the future, and perhaps even lead your kids to become members of the next sandwich generation. For those stuck in the middle of two generations of family needing support, here are some strategies to help with finding a balance.
1. Prioritize Your Retirement Savings
The cornerstone of sandwich generation retirement strategies is to prioritize your retirement savings ahead of both college savings for your kids and long-term care for your parents.
Saving money for retirement ahead of saving for college is an easier decision to make, since college students have the opportunity to apply for aid and loans, while there are no such options available for retirees with inadequate savings. Even the most doting of parents can recognize the importance of prioritizing retirement over college savings.
This can be tougher advice to follow if your parents' long-term care is the primary financial need competing with your retirement savings. Prioritizing those retirement savings ahead of your parents' care can be a very difficult and emotional decision to make. But adults in the sandwich generation should use their parents' assets for their care for as long as possible. This can help them avoid passing on a legacy of sandwich generation financial problems to their kids.
Just as caregivers are not selfish for taking time for themselves, adults in the sandwich generation are not selfish for continuing to fund their retirement.
2. Have "the Talk" With Your Parents
You need to know where your parents stand financially before they begin counting on you for care. Although it may be uncomfortable, it's worth asking your parents what they have saved for retirement, whether they have life insurance, what plans they've made for their twilight years and who their financial representative is (if they use one).
This conversation will help you prepare for the tough decisions you might face if either or both of your parents face a health problem, a loss of independence or any other problem associated with aging. It's also important to keep an eye on your parents' financial decisions, since your involvement can help protect them from potential scams. In addition, make sure your parents let you know where to find important documents such as wills, trust documents, insurance policies, investment account statements and the like.
Another helpful conversation to have is with your parents, siblings and other relatives. Ideally, you should all decide together who will have power of attorney and who will assume the role of main caregiver should your parents need it. Making these decisions ahead of time can help save you from stress, miscommunication and possible resentment during the emotional upheaval that comes with caring for an ailing parent.
3. Insure Yourself
Members of the sandwich generation may want to consider taking out adequate disability and life insurance. According to the Council for Disability Awareness, nearly 1 in 4 workers will experience a disabling condition that puts them out of work for at least a year. If you have two generations counting on you and your income, such a disability could be a financial disaster. Disability income insurance can help make sure you're able to carry on financially even if you become disabled.
Similarly, inadequate life insurance coverage could become a problem for your parents and children should something happen to you. You may want to consider coverage even if you've become a full-time unpaid caregiver for your parents (or children). Just because you don't have an income doesn't mean your family could easily absorb the cost of additional care if you were to pass away. Both income earners and stay-at-home caregivers in the sandwich generation should think about carrying enough life insurance to take care of their family.
4. Investigate Available Government Benefits
One way members of the sandwich generation can help their parents is by reading up on the details of Medicare and Social Security (as well as other benefits). You can help your parents navigate the financial programs available to them through government entitlement programs and become more educated for your own future at the same time.
You can visit websites like www.benefits.gov to find questionnaires that can help you determine which benefits your parents are entitled to. The sites will also direct you to the correct programs to get your parents signed up.
5. Ask for Help
Taking care of the day-to-day needs of both children and elderly parents is quite a project even before finances enter the equation. Talking to a financial representative can help you figure out the best course of action for reaching your retirement goals while also affording your parents' care and planning for your children's future. Together, you can craft and implement a plan that can help protect everyone in your family. Remember: You may be busy, but you don't have to go it alone.