Members of the Sandwich Generation can use these tips to help navigate the financial aspects of caring for aging parents while raising children at the same time.
Strategies for Raising Kids and Caring for Aging Parents Simultaneously
If you’re raising children or caring for your aging parents, you know that either role can be stressful, often causing financial pressure, too. However, if you’re a member of the “Sandwich Generation” it means you’re managing both challenging roles at the same time.
According to the Pew Research Center, approximately one in seven Americans between the ages of 40 and 60 are caring for minor children and aging parents simultaneously, while also balancing their own career and personal matters. This juggling act can be taxing – both financially and emotionally – but this article is meant to provide guidance on financial strategies that can help those in the Sandwich Generation support their loved ones while also saving for retirement and their own financial futures.
Sandwich Generation Tip: Set Priorities
When you have multiple financial responsibilities, it is essential to set priorities. Decide which expenses are most critical and allocate your money accordingly. For instance, if your aging parent needs expensive medical care, prioritize that over other expenses that can wait. Similarly, if your child’s education is a priority, allocate funds to your 529 Plan before making other investments. Don’t neglect to think about your own financial future, too. Oftentimes, it’s smarter to save for your own retirement before funding higher education for your children, though every person’s circumstances are unique.
SEE ALSO: The Importance of Estate Planning at Any Adult Phase of Life
Sandwich Generation Tip: Budgeting
As you’re clarifying your financial priorities, it can also be critical to create a realistic budget for your household. This will help you track your spending and ensure that you don’t overspend from month to month so that you can continue to provide for the basic care needs of both your children and your aging parents. Make sure to include all expenses, such as housing, utilities, food, medications, insurance needs, and more. Remember also to budget for any non-essential or entertainment expenses you expect. If you don’t yet have a fully funded emergency fund, it’s also smart to add a savings plan to your monthly budget so you can be better prepared for unexpected expenses, such as medical bills and home repairs.
Sandwich Generation Tip: Save for Retirement
It is often tempting for caregivers to focus solely on immediate financial responsibilities. After all, you only have so much bandwidth and managing the day-to-day can require a great deal of energy and other resources for those in the Sandwich Generation. However, it is essential to make basic plans for the future, including planning for your retirement. Set aside funds for your retirement savings account, such as a 401(k) or IRA. Planning ahead means a better chance of achieving a more comfortable retirement, and potentially having to rely less on your children once you reach your parents’ age.
Sandwich Generation Tip: Utilize Assistance Programs
There are various assistance programs available for the Sandwich Generation that can help reduce financial stress. For instance, you may be eligible for tax breaks, healthcare subsidies, or caregiver support programs. Do your research and take advantage of these programs to help reduce your financial burden. Working with a financial professional can help you gain greater awareness of programs and strategies that work in your financial favor.
SEE ALSO: Do Stay-At-Home Parents Need a Retirement Plan?
Sandwich Generation Tip: Consider Long-Term Care Insurance
Long-term care insurance can help pay for expenses related to aging, such as nursing home care, in-home care, and medical expenses. This insurance can help ensure that you and your loved ones are protected in the event of an unexpected medical crisis, while mitigating costs, as well. However, long-term care insurance tends to be expensive, and it won’t be the right strategy for every family. Speak with a financial advisor to determine whether this investment may be best for your personal circumstances.
Sandwich Generation Tip: Communicate with Family
It is essential to communicate with your family members about your shared financial situation. Discuss your financial priorities and responsibilities and seek their support and buy-in. This can help reduce any misunderstandings or conflicts and ensure that everyone is on the same page and moving forward in a like-minded way.
Would You Like Professional Guidance on Navigating Your Financial Situation?
If you’re a part of the Sandwich Generation, you may be facing unique financial challenges that require careful planning and prioritization. By setting priorities, budgeting, saving for retirement, utilizing assistance programs, considering long-term care insurance, and communicating with family members, you can more successfully manage your finances and provide for your loved ones.
It may also serve you well to work with a trusted financial advisor in order to form a stronger financial foundation today and into the future. At Aviance, our team of experienced financial professionals stands ready to provide friendly, personalized wealth advice and investment solutions for your family. Schedule a conversation with us today to learn more about how we can help you achieve your financial goals. We look forward to hearing from you!
Aviance Capital Partners, LLC (“ACP”) is an SEC registered investment adviser located in Naples, Florida. Registration as an investment adviser is not an endorsement by securities regulators and does not imply that ACP has attained a certain level of skill, training, or ability. While information presented is believed to be factual and up-to-date, ACP does not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. Not all services will be appropriate or necessary for all clients, and the potential value and benefit of the ACP’s services will vary based upon the client’s individual investment, financial, and tax circumstances. The effectiveness and potential success of a financial plan depends on a variety of factors, including but not limited to the manner and timing of implementation, coordination with the client and the client’s other engaged professionals, and market conditions. The tax and estate planning information provided is general in nature, which should not be construed as specific financial planning or tax advice tailored to an individual reader. ACP suggests that readers consult a financial professional, attorney or tax advisory professional about their specific financial, legal or tax situation. Customized financial planning indicates that financial planning will be informed by the material financial and investment circumstances of the client, as communicated by the client to the adviser, but may not consider literally all aspects of a client’s financial affairs. Past investment performance does not guarantee future results. All investment strategies have the potential for profit or loss, and different investments and types of investments involve varying degrees of risk. There can be no assurance that the future performance of any specific investment or investment strategy, including those undertaken or recommended by ACP, will be profitable or equal any historical performance level. Additional information about ACP, including its Form ADV Part 2A describing its services, fees, and applicable conflicts of interest and its Form CRS is available upon request and at https://adviserinfo.sec.gov/firm/summary/146597.
For current ACP clients, please advise us promptly in writing, if there are ever any changes in your financial situation or investment objectives, if you wish to impose any reasonable restrictions to our management of your account, or if you have not been receiving at least quarterly account statements from your account custodian.