Wednesday, July 01, 2015

Dynamic Advice on Surviving the Sandwich Generation


July is Sandwich Generation Month. The sandwich generation are those aged 40 to 59 and includes those who are caring for children and aging parents. This becomes a huge financial burden and can increase stress, anxiety and health issues due to the extra commitments. Another layer of burden is added when a sandwich generation member has to care for step parents or step children.

According to a PEW study in 2013, 47% of adults in their 40s and 50s have a parent age 65 or older and are either raising a young child or financially supporting an adult child. Approximately 15% of adults are providing financial support to both an aging parent and a child.

Research shows that increased financial burdens come from adult children who are struggling financially especially those who move back home with their own children. This requires not only financial support but emotional support and time – time that is already maxed out with the sandwich generation members own lives.

Caring for adult children puts the sandwich generation at a financial risk. Many struggle with deciding to plan for retirement or save money for college tuition. This should not be an emotional choice. It should decision made based on figures and with a financial professional.

However, this can be avoided if smart financial decisions are made upfront to safeguard strain on retirement and other financial goals and ensure they are met. The key to surviving being a member of the sandwich generation is effectively managing risks (unemployment, health issues, reduction in benefits, job relocation, unexpected emergencies, collection tuition, cost of living adjustments, etc.).
There is no guarantee that your children or step children, a younger relative or spouse will be able to take care of you during retirement so it is essential that you save enough in your retirement account to cover your living expenses for at least 30 years.

You also need to consider worse case scenarios. What happens if you child drops out of college, you child changes their major or transfers to another school, if you adult child gives birth to another child while living with you, if you get divorced, your spouse become ill or dies or your child becomes unemployed. These unexpected events may result in increased financial burdens but should not result in less money in your retirement account.

Talk to a financial advisor who will help you determine what age you what to retire, how much you will need during retirement, where you want to live during retirement, your living expenses, and other financial goals and requirements.

Here are 12 fantastic financial tips on how to survive the sandwich generation:

  • College Insurance - Discuss health insurance and auto insurance coverage with children who are recent college graduates.
  • Medicare - Ensure parents are enrolled in Medicare before age 65.
  • Insurance for self - Ensure you have adequate life, health, disability and long-term care insurance for yourself.
  • Insurance for aging parents - Ensure your aging parents have adequate life, health, disability and long-term care insurance.
  • Create a plan - Create a health care plan for yourself and your aging parents to include: who they want to care for them (you or a professional), do they want to go to a nursing home, what are all their sources of income, funeral arrangements, setup an advanced care directive and estate executor, current health issues and medication, contact information for health care and other service providers, health care fees, etc.
  • Solicit support – Join a support group or create your own support network of other family members, siblings and friends.
  • Discuss finances – Review insurance policies, annuities, wills, trusts, and other documents to ensure they are current and to ensure you know aging parents wishes. Make any necessary changes and ensure the documents are kept up-to-date.
  • Take care of you - Remember to take time out for yourself. Your family depends on you and you can’t effectively prepare for the future if you are not healthy.
  • Retirement – Don’t tap your retirement account, continue to save for retirement. You may have to save more aggressively since you now have additional financial commitments. This will ensure your own financial future, which will put you in a better position financially when you get older.
  • Emergency fund – Save at least nine to twelve months’ worth of living expenses in a savings account to cover unexpected emergencies.
  • Benefits - Ensure your employee benefits are up-to-date. Sign up for any extras such as sick leave bank, overtime, Family Medical Leave, and health care savings account.
  • Adult Children – Determine the amount of financial and non-financial support you can give. Don’t over exert yourself. Don’t feel guilty about saying no. Set ground rules in your home. Set limits on the type of support you will provide and how long you will provide support.



No comments: