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The Financial Stress of the Sandwich Generation

Talk about being stuck between a rock and a hard place. Members of the "Sandwich Generation" – typically identified as those between the ages of 40 and 65 caring for children transitioning to adulthood and parents in their declining years – face a heavy financial burden.

In the face of such stress, members of the Sandwich Generation might be tempted to sacrifice their own financial stability. However, sacrificing one's own financial stability for parents or progeny could have devastating financial consequences.

Fortunately, there are solutions available.

Caring for parents
The first investment required when determining care for any loved one is time: time to research possibilities and then to consider all options. Research can make a great difference, especially when it comes to caring for aging parents who are losing the ability to care for themselves.

  • Housing needs for your parents have likely changed. There are fewer – likely no – children at home, for one. "Nice to haves" such as a work shed or greenhouse are likely going unused as elderly parents' mobility decreases. Downsizing makes a lot of sense, where a move to a smaller home – or even a "mother-in-law" suite – can allow any profit to be saved and costs on everything from taxes to heating and cooling reduced. Speaking with a financial advisor can help identify potential savings.
  • Your parents likely paid into programs such as Medicare and Medicaid for many years; now's the time to consider turning to them for support. Start here.
  • Is one of your parents a U.S. military veteran? Aid may be available; check out the website for the U.S. Department of Veteran Affairs to learn more. Among the offerings is the Department's Aid and Attendance program for the elderly.
  • Many companies sell long-term care insurance that helps address the growing costs for elder care. Start this process early - before your parents can no longer care for themselves. It's a complicated issue, though: this is where that research time is going to pay dividends. You can start at the U.S. government's page on the topic.

Caring for children
Challenges surrounding today's job market factor into many parents' considerations for financial support. That consideration can take the form of:

  • An increased focus on ensuring a quality education. But despite every parent's strong desire to ensure a safe and secure future for their children, providing bottom line-busting financial support for an education simply doesn't add up. No one likes the idea of carrying around onerous student loan bills, but the fact of the matter is that the younger generation carrying those burdens will have a longer period of time in which to pay them off than their parents will to replenish depleted retirement savings. Loans needn't be the first line of support, either. Check for scholarships that might be available to offset education's rising cost and speak with school representatives about addressing education's costs. Encourage your children to attend a community college for a year or two to save on costs before transferring to a University.
  • Welcoming the children back home – if they ever left. According to Pew Research, 36 percent of the nation's young adults ages 18 to 31 were living with their parents in 2012. This can be a good time for those children to either work on the aforementioned education without the added costs of room and board or for them to save up for a place of their own. It is not a good time to spend so much extra money on their social life and other expenses that it limits retirement savings efforts.

With all parties involved, perhaps the most important aspect is communication. Discuss with both your parents and your children the limitations of your financial support. Getting everyone on the same page will allow everyone to work towards a similar goal. Speaking with a financial planner can help to direct you towards other possibilities.

Being part of the Sandwich Generation doesn't have to mean financial stress. In fact, with careful research and planning the needs of multiple generations can be met – without anyone biting off more than they can chew.


Securities offered through Royal Alliance Associates, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor not affiliated with Royal Alliance Associates.


Published in Wealth Management

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