If you find yourself squeezed between caring for aging parents and providing for your own children, you’re experiencing Sandwich Generation issues. Members of the so-called Sandwich Generation find themselves continually trying to navigate the needs of their parents, who are living longer than seniors ever have before, and their children.
Amid the crush of responsibilities, it’s easy for your own needs to fall by the wayside. If you’re a member of the Sandwich Generation, here are eight ideas that can help you manage your different roles—without jeopardizing your financial goals.
1. Your parents took care of you, so you may be tempted to do the same for them. And when it comes to your kids, your first instinct may be to put their needs ahead of yours.
While the desire to support your loved ones is understandable, it’s important to make sure doing so doesn’t undermine your own financial health. One way to think about it is this: If you are the financial foundation for your family, weakening that foundation is bad for everyone in the long run.
2. Honestly and openly discussing money and mortality with your parents can be hard. While this may be a conversation you’ve avoided, the best time to have it is before you are in a situation where you’re caring for an elderly or ill parent.
The more you understand your parents’ financial plan and assets, the better prepared you are to foresee shortfalls and assess how to help. Ask your parents about their living expenses and their financial resources before something happens.
3. Many Sandwich Generation members deal with steep out-of-pocket costs for long-term care. The cost of in-home or nursing facility caregiving can exhaust your parents’ assets very quickly. Neither traditional insurance nor Medicare will cover that care, so you may want to look into long-term care insurance.
Keep in mind that it costs less to buy long-term care insurance when you’re younger since the premiums increase as you age. The time to plan for this is before a crisis starts and when everyone is still in good health.
4. Medicaid might cover medical costs, including long-term care costs, for those with very limited financial resources. Make sure to explore the eligibility requirements of those benefits and the role they might play in your parents’ plans. This may be your parents’ best route for care as they age, as it doesn’t deplete your or other family members’ resources.
5. Your parents’ biggest asset may be their house. As they age, they may decide to sell it for financial or lifestyle reasons. Be sure you incorporate the value of their home into your planning, especially if they can no longer live independently.
6. While your parents may be your most immediate worry, you may also be thinking about how to pay for your child’s college education. You might consider using 529 college savings plans. These plans are flexible, tax-advantaged accounts specifically designed to allow you to make contributions to pay for college. You won’t be taxed on your contributions as they grow—and you pay no federal (and often state) taxes on withdrawals used for qualified higher education expenses. To learn more about Section 529 college savings plans, check out the resources provided by Merrill Edge.
In addition to 529 plans, there are other things to consider as your child nears college. Before your children start applying to colleges, it’s a good idea to research and apply for any scholarships, grants or loans they might be eligible for. Remember not to neglect your own finances—loans for college are available; loans for your retirement years are not.
7. For some parents in the Sandwich Generation, college is not the final stage of financial support for their kids. More young adults—sometimes referred to as the Boomerang Generation—are moving back in with mom and dad while looking for full-time employment.
That doesn’t necessarily mean a free ride, however. Consider asking your child to contribute to household expenses such as food, mortgage payments and utilities. Your child might want to get a part-time job, which can help mitigate the cost to you of his move back home. Be clear about your expectations regarding his responsibilities.
8. To make matters more complicated, many Millennials are experiencing a challenging employment environment as they look to settle down and start their own families. Weddings are pricey (think tens of thousands), and most couples rely on help from their parents to pay for them.
When it comes to saving for wedding expenses, work with your children to set reasonable expectations around what you can contribute and help them find ways to cut costs.
Being a member of the Sandwich Generation can sometimes feel like a difficult balancing act, involving a great many responsibilities and stresses. While it may seem difficult, you’re not alone. Talk to your friends about their experiences and look for support online. Above all, make sure your financial house is in order and plan for your own retirement—that can help you build a strong foundation in order to pursue all your financial goals.