Money & you Financial tips for the sandwich generation
By HEIDI CLUTE | April 23,2013
Are you caught in the middle between supporting children and caring for aging parents? At a time when your career is reaching a peak and you are looking ahead to your own retirement, you may find yourself having to help your children with college expenses or supporting them during a job search while also looking after the needs of your aging parents. Squeezed in the middle, you’ve joined the ranks of the “sandwich generation.”
If you feel trapped in the middle, you’ve got company: about one in seven (15 percent) middle-aged adults is providing financial support to both an aging parent and a child. Today, members of both the Baby Boomer generation and Generation X are part of the “sandwich generation.” Since Pew Research first explored this topic in 2005, many Baby Boomers have “aged out” of the sandwich generation; so, as of 2012, Generation X’ers are more likely than Baby Boomers to find themselves in the “sandwich.”
Caring for your parents
The squeeze of caring for children and parents takes its toll in many ways — emotionally, physically, and financially. Here are some tips on dealing with the finances and legalities:
Ÿ Talk with your parents. Find out, in detail, what your parents have in terms of savings, assets, income, insurance and legal protection. Review their bank and financial arrangements. Look into their medical coverage. Find out about their Social Security and pension benefits; remember to check for digital assets too, including online banking information and passwords, for example.
Ÿ Gather or locate important documents from them, such as Social Security number(s), Medicare and Medicaid numbers, insurance information (especially long-term-care insurance), doctors and their phone numbers, medications, bill-pay notifications, property deeds, trusts, driver’s license number, birth certificate and any other relevant information. Check for updated wills, trusts, and beneficiary designations on retirement plans and insurance policies.
Ÿ It’s essential that your mother and/or father have a current durable power of attorney — for both financial care and health care — and a living will. The durable power of attorney (POA) and the Health Insurance Portability and Accountability Act (HIPPA) waiver allows your parents to give you (or another trusted person; it doesn’t have to be a lawyer) the right to make financial, legal and health decisions on their behalf.
Ÿ Review your own financial situation. Assess all of your assets, liquid and otherwise. Figure out how much money you should pay for your children’s college and your retirement. You may want to create a financial plan, with a reputable financial planner, if possible.
Caring for your children
According to Pew Research, “While the share of middle-aged adults living in the so-called sandwich generation has increased only marginally in recent years, the financial burdens associated with caring for multiple generations of family members are mounting. The increased pressure is coming primarily from grown children rather than aging parents . . . One likely explanation for the increase in the prevalence of parents providing financial assistance to grown children is that the Great Recession and sluggish recovery have taken a disproportionate toll on young adults. In 2010, the share of young adults who were employed was the lowest it had been since the government started collecting these data in 1948.”
Here are some things to keep in mind as you try to balance your family’s needs:
Ÿ Avoid dipping into your retirement savings to pay for college. You can finance college; you can’t finance your retirement.
Ÿ If you have grown children returning home, make sure all your expectations have been shared with them. Don’t be afraid to discuss employment and income goals as well as a target date for their departure.
Ÿ Put yourself first. If you’re part of the sandwich generation, you’ve got your hands full. Your natural inclination might be to serve yourself last, but that can jeopardize not only your financial health but also your physical and mental well-being. Get enough rest and relaxation regularly, and stay involved with your friends and interests. Finally, keep lines of communication open with your spouse, parents, children and siblings.
Ÿ Check available benefits with the National Council on Aging. Visit https://www.benefitscheckup.org/ to find out which federal, state and local benefits your parents qualify for. You’ll be surprised at the number of programs out there — including those providing assistance with health-care and utility costs, as well as property tax relief — available to middle-class families.
Then, check again: Screen here for government-benefits eligibility and get contact information for the programs you’re interested in. It’s best to fill out the questionnaires on both sites to ensure that you’re not missing anything.
Heidi Clute, CFP® is the owner of Clute Wealth Management in Plattsburgh, NY, and South Burlington, VT, an independent firm that provides strategic financial and investment planning for individuals and small businesses in the Champlain Valley region of New York and Vermont. Securities offered through LPL Financial, Member FINRA/SIPC. v