The Sandwich Generation: How to Financially Balance Parents and Children.

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The Sandwich Generation: How to Financially Balance Parents and Children.

It’s hard to care for kids and parents while saving for retirement. Supporting others shouldn’t mean sacrificing your own financial future and well-being. Here are some tactics for minimizing the stress for everyone involved.

As if trying to meet day-to-day expenses while saving for retirement and paying for college isn’t enough, many people find themselves increasingly responsible for the physical, emotional, and financial challenges of caring for aging parents. Welcome to the sandwich generation—a growing part of the population feeling a financial burden from children on one side and parents on the other.

The biggest danger for those stuck in the middle is the risk of neglecting your own self-care while attempting to help everyone else. Here are some steps you can take to protect your financial and emotional health while continuing to provide support for your loved ones.

Talk About Money

Having the “money talk” isn’t something most of us feel comfortable with. Having the talk with your parents can be challenging, especially if they have traditionally been financially independent. However, it’s crucial to bring up the topic to avoid the risk they will outlive their retirement nest egg.

Coming away from your money talk, you should be aware of your parents’ finances, including a comprehensive list of everything pertaining to their finances. The list should range from the location of financial records, legal documents, and bank accounts, to the types of insurance they have in place. Having this on hand goes a long way toward that conversation about roles and responsibilities moving forward.

Ramp Up Planning Efforts

Caring for kids and aging parents comes with many difficulties—there’s no telling how much help they’ll need or for how long. If you’re one of the millions of Americans facing this challenge, a good way to cope is to plan, plan, and plan some more.

In today′s world, the importance of a well-executed retirement plan cannot be underestimated and a solid retirement income plan can help avoid one of the biggest retirement mistakes people make – spending too much too soon. Various factors have an effect on retirement income such as your rate of return on savings and investments, how long retirement is anticipated to last, inflation, taxes, spending, part-time earnings, Social Security, pensions, etc. (Check out the range of retirement portfolios and set up your complimentary strategy session with CKS Summit Group here.)

Saving More

If you’re in the sandwich generation, it’s even more important to save as much as possible. This is especially true if you have to take time off from work to care for parents. So be sure to take advantage of any and all tax-advantaged saving vehicles.

If at all possible, don’t dip into your retirement savings—whether through loans or early withdrawals—to support your kids or parents. Dipping into your nest egg sacrifices the potential for tax-deferred growth. That could eventually force you to depend on your children for financial support in retirement.

Remember the Kids

Children are expensive. So if you have kids, your finances may be pressed even before you consider whether you have the resources to help out aging parents. Before you commit to helping your parents, be sure you’ve thought through the costs of child care and saving for college tuition. It can be tough to find the extra cash for a 529 plan, but doing so when also trying to help support a parent is that much harder.

As your children grow older, you may find that asking them to shoulder more of their own expenses provides opportunities to help them develop greater financial responsibility (while giving you some welcome relief from spending pressures). This can include requesting them to pay for their own cars, hold part-time jobs, pay a share of college costs or contribute rent if they move back home.

Financial Protection

Make sure you and your parents have adequate health care insurance now, and for your retirement. Remember, Medicare does not cover everything.

For example, long-term care is not covered by Medicare, and can be pricey. The average annual costs for nursing home or assisted living are $85,776 and $45,000, respectively. Do you and your parents need long-term care insurance? The answer depends on your age, the cost of coverage, how long you might need coverage, and the types of benefits you want. So carve out the time to weigh your options.

Finally, with the needs of multiple generations on your shoulders, protecting your family from the risk of your disability or death may be more important than ever. Disability and life insurance can help make sure that your loved ones are cared for in the event that you are unable to work.

Seek Both Personal and Professional Support

Explore alternatives such as sharing care-giving responsibilities with siblings or other family members. Even a simple 1- or 2-day break can make a huge difference and reduce responsibilities. Professional support may be necessary in many cases. In-home care and home health care services are just a few examples of assistance available.

Professionally, attorneys can help create crucial estate planning documents. Financial retirement planning services can help you stay on track with a personal financial plan and help guide you towards finding some balance between life’s competing priorities as you approach retirement.

Final Thoughts

The best way to cope with financial obligations facing the Sandwich Generation is for everyone (aging parents, children, and those stuck in the middle) to have a financial plan. Proactive planning will help reduce your financial stress if you are already dealing with the balancing act or you simply have concerns you may be in this spot in the near future.

The one constant is the need for the generation currently in the middle to look after its own needs. You want to be able to help your parents out with confidence, and help your kids achieve their potential. But you also don’t want to be a burden to your children down the road, so saving for your own retirement and looking after your own financial and physical well-being is a favor you can do for them as well as for yourself.