Five Financial Moves the Sandwich Generation Should Make

Five Financial moves the sandwich generation should make

This article is an excerpt from our ebook “Taking Care of Your Finances While Taking Care of Your Aging Parents,” which you can download here.

If you are “sandwiched” between taking care of a parent and providing for children, then you are a part of what is known as the sandwich generation. A Pew Research Center report indicated that 47 percent of adults in their 40s and 50s are in this situation.

Being part of the sandwich generation is extraordinarily tough on finances, and it could be affecting your retirement. Don’t let it.

Here are five financial moves to help you provide for your parents and children while saving for retirement as well:

1.) Encourage your children to apply for college scholarships and loans.

Maybe your high school senior has plans to attend a university out of state: She’ll live in a dormitory and hang out with friends at the student union as she figures out what subject she’d like to major in.

Those ambitions are great, but they’re also expensive. Out-of-state tuition will cost you more than in-state, and then you’ll have to pay more for room and board. However, if you don’t help, your daughter is looking to take on a substantial amount of debt in student loans.

Your daughter can take out a loan for college – you can’t take out a loan for retirement.

You probably still want to help. Encourage her to apply for college scholarships and find other ways to offset the cost of college.

2.) Consider retirement homes for your parents, or even encourage them to move in with you.

It might be easier to search for a retirement home for your parents. You can consider facilities near where they live or encourage them to move closer to you. Or, if you have to, you can even encourage your parents to move in with you.

Understand first that having a parent move in with you can be extraordinarily difficult in an emotional sense. If living with your parents was hard the first time around, there’s a good chance it won’t go so well the second time.

But it could be the best option in the long run. You can reduce costs in either homeowner’s insurance or paying for a retirement home. This could even improve your parents’ quality of life, as they’ll get to spend more time with family. By keeping your children involved in their lives, your children will develop deeper connections with their grandparents.

3.) Let your adult children move back in.

This one may seem counterintuitive, but it truly is a tough market out there for recent college graduates. If your child is unemployed, she’ll probably be looking to you for financial help whether she lives with you or not. By allowing her to stay at home, you don’t take on the costs of her rent and bills. You will see a few increases — in groceries and utilities — but these pale in comparison to what they could be.

Remember, you’re not her ATM. She should fund her own social life. Communicate regularly with your child about a plan to get her working and living independently again.

4.) Educate yourself.

Make sure you consult the right people — financial advisors, tax planners, estate attorneys — about your options. You might be able to claim your adult children or parents as dependents. If that’s the case, you’re looking at a deduction of roughly $4,000 a year for each child or parent under your care.

Likewise, you might be able to help support your parents through programs like Medicare, Medicaid, veterans’ benefits, social security, etc. Have a professional ensure you aren’t missing out on any financial breaks or opportunities available to you.

5.) Let your parents and children make decisions.

Remember, your parents and children are people, too. They are entitled to take part in the decisions that affect their lives. If you’ve decided to take care of them financially, communicate openly about your financial situation and allow them to weigh in. If your children are younger, model good financial skills so you can avoid funding their lives after they leave the house.

Being a part of the sandwich generation is not as delicious as it sounds, especially where finances are concerned. But it doesn’t have to ruin your retirement. By taking these five financial bites, you can provide the support your parents and children need without neglecting yourself.

Download the rest of this ebook here.


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