Sandwiched in: Focusing on Finances While Supporting Family

Whether it’s stories about the “skills gap” being created as Baby Boomers retire or criticism of the expensive coffee habits of Millennials, generations crowd the headlines. No matter what generation your birthdate puts you in, you might find yourself living in the middle of another one – the sandwich generation.

The Sandwich Generation

Descriptions of the sandwich generation have evolved since social worker Dorothy Miller, first wrote about these caregivers more than 35 years ago. This is due to longer life expectancies, people having children later in life and the increased needs of some dependent children.

If you are caring for aging parents while raising or supporting your own children, you know how being sandwiched in feels. While family bonds may be strengthened, the stress associated with caring for multiple generations can take a toll on your health and wealth.

Carving out time to focus on your physical and emotional needs should be a priority. It’s hard to care for others if you aren’t taking care of yourself. But there’s another important sandwich generation stressor that needs to be addressed. You need to be focused on your financial situation too.

The Costs of Caregiving  

Even though you may be in your peak earning years, caregiving may derail your saving and investing plans. Keep in mind that shifting your financial strategy at this stage in life can have a significant impact on your future.

As your parents age, complicated medical issues may require ongoing treatment, expensive prescriptions and hospital stays. Costly renovations may even be needed for them to continue living at home. If they require a higher level of care, moving a parent to an assisted living facility or nursing home may be your only option.

Recent reports highlight the skyrocketing costs of eldercare. For a private nursing home room, you can expect to pay about $100,000 per year. If your parents haven’t planned for these expenses, you may end up contributing to or paying for their care.

And it’s not just our parents we worry about. There are numerous studies showing parents spend over $200,000 raising a child to the age of 18. You may be paying for childcare and extra-curricular activities, in addition to saving for college. And some parents have adult children living at home who need financial assistance too.

As caregivers, we tend to put the needs of our children and our parents first. But we need to remember how important it is to stay focused on our own financial situation. If we fail to plan, we may simply be shifting the costs of caregiving on to our own children in the future.

Make Your Finances the Priority

You can’t depend on working for the rest of your life to make up for the sandwich years. When you have a financial plan that will support your future, it may also reduce some of the emotional stress you’ll be feeling during this difficult time.

Do an in-depth review of your financial situation. Develop a health care plan for yourself and consider products such as long-term care insurance. Continue contributions to retirement and savings accounts, maintain an emergency fund and pay off consumer debt.

If you have to reduce payments while supporting your family, make temporary adjustments. And don’t forget potential tax benefits related to caring for dependent children and parents. Consider seeking help from a financial planner, accountant or attorney who specializes in eldercare,

If you need more incentive to put yourself first, the oxygen mask analogy might help. Flight attendants always direct you to put on your mask before helping others. The reason? By the time you’ve helped everyone else, you may not be able to help yourself.

Talk to Your Parents About Money

If you have siblings, try to set up a family meeting about your parents’ finances. These can be difficult conversations, but they are important and shouldn’t be avoided.

When discussing funding your parent’s care, ask about retirement accounts, savings, social security, pensions, insurance policies, Medicare or VA benefits. Consider other assets too. Could home equity be accessed for long-term care?

Plan Financial Support for Your Adult Children

You’ve made your finances the priority and you’ve talked to your parents about money. In addition to caring for any younger children you have, you can now think about financial support for your adult children.

Paying for college expenses may no longer be an option. You can’t put your child’s future ahead of your own. Talk about college options, including starting at a community college. Don’t believe the myths that all private colleges and out-of-state schools are more expensive than in-state options. Seek out scholarship opportunities and carefully review financial aid packages. And encourage your child to get a part-time job and start saving for college. If your adult children move back home, consider having them pay rent. Remember your goal is to help them become financially independent.

Putting your family first and caring for multiple generations is no easy task. But remember, you won’t be in the sandwich generation forever. Find a balance between funding your future and helping your aging parents and maturing children. It will help you navigate this challenging and rewarding time of life.

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