Do you have children? Are your parents beginning to age and need your help making decisions? If “yes”, chances are you are a member of the sandwich generation. We’re not talking BLTs here. It’s the name for the so-called generation that is caring for both children (young or grown) and aging parents.
Members of the sandwich generation fit into a few categories but generally they are the caretakers, financial coordinators and health care proxies for their children and parents. Depending on the age and health of their parents, these responsibilities may come on gradually or all at once. When adult parents are in good health and are aging gracefully, the sandwich generation’s role may just be making sure bills get paid on time. However, should a serious medical condition arise, the role may change to financial coordinator and caretaker. At some point, the sandwich generation may find themselves in on all three roles: caretaker, financial coordinator and health care coordinator.
Worlds collide when you find yourself caring for your parents at the same time your kids are getting ready for college or moving back home. Juggling responsibilities for two households doubles your to-do lists and often your stress level. It also can also be very costly depending on individual financial situations.
Before you start getting pulled in different directions by your parents or your children, it’s important to first evaluate your own financial plan. You can’t take care of anyone else financially if you’re not taking care of your needs first. Make sure your retirement savings are on track and that you’re progressing toward your financial goals.
“It’s stressful when you’re being pulled by different generations...the more you can feel confident with your financial stability, the more that will help alleviate the stress,” said Susan Dewsnap, Vice President and CERTIFIED FINANCIAL PLANNERTM at Rockland Trust’s Investment Management Group in Providence, RI.
Talk to Your Parents as Early as Possible
The question of how raise a family and care for your aging parents begins with having a difficult conversation. Many times, a conversation around estate planning comes up when someone in the extended family dies or becomes ill. Susan advises clients not to wait until this event occurs to begin the conversation with your parent(s). The earlier boundaries are set the better. Susan recommends starting open communication with aging parents between ages 60-65 to make sure you understand their financial situation.
“It’s never too early to approach the subject,” said Susan who started talking to her parents when she had her own children.
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What You’ll Need
In order to be fully informed, there are a number of documents that you will need to gather from your parents. While they might find this to be an invasion of privacy, there’s no way to help them if you can’t fully assess their situation. Have a meeting with your parents to go over all the details including: financial assets, sources of income, wills, health care directives, health care proxies, durable powers of attorney and long-term care insurance.
If you are in the financial position to help your parents, be sure to fully understand how much they need. It’s a good time to develop a relationship with a financial advisor. The financial advisor can help you develop a budget for your parents to determine their ability to support themselves and a cash flow projection to determine how long their savings will last.
Make sure your parents are receiving all the benefits they are qualified for such as Medicare, Medicaid and any veterans benefits. Do not jeopardize your retirement or your children’s college education to support your parents if they have other means to collect income. Contact your local senior center and ask for a meeting with the person who can walk you through the available state and federal programs and how to apply. Health care costs are one of the biggest financial drains on seniors, which makes it even more important to stay on top of health insurance and any benefits that need to be renewed annually.
Set Realistic Expectations for Children
Once you have set budgets and boundaries with your parents, you’ll be ready to do the same for your nearly grown or adult children. Plan the same way for a college-age child. Begin by applying for financial aid, loans and any scholarships that can help defray the cost of a college diploma. Next, decide what is affordable for your family and your child and work out a budget. Perhaps there’s a work-study program your child can apply to for or an on-campus job.
This is no time to be tempted to use your 401k. If you give in and use your retirement savings, you could find yourself working longer. Once your college graduate completes four years of higher education, make sure they have a plan in place for how they are going to pay for expenses now that they are on their own. If your college graduate can’t make ends meet because their college debt is too high or their wages aren’t enough to make ends meet, talk to someone who can help with debt consolidation.
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Don’t Do It Alone
Finally, if this all seems overwhelming, seek advice. Susan recommends talking to a financial advisor to get a handle on the financial situation and provide outside perspective. When it comes to family, our emotions can cause us to lose perspective. Susan said caretakers need to remember to keep their financial priorities straight. Even though it may feel like you are responsible for your elder’s care, you are ultimately not obligated to support them. This is especially true if you don’t have the means. Determine what’s doable and when you need to ask for help.
Once you have your parent’s or grown child’s financial situation under control, you can give them your time, which may be even more valuable than your money. It’s stressful to make decisions on behalf of your family members alone. Talking to financial experts at Rockland Trust can help ease the worry.
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