Are you feeling stuck in the middle, managing the twin challenges of personal family business matters and raising your children while also caring for elderly parents? You’re not alone. Millions of Americans are members of the so-called “sandwich generation”—people who are trying to balance their responsibilities to both the older and younger generations. In many cases, that means financially supporting dependent children while also providing assistance, either financial or otherwise, to their parents.
How can members of the sandwich generation manage these competing needs? The following tips can help you balance your different money management responsibilities.
Tip #1: Stay Informed
As your parents get older, it’s critical to stay abreast of what is going on in their lives. Regular contact can make it easier to notice when something is amiss (for example, if your mother’s memory starts to fade or your father starts having trouble getting around). In addition, you’ll want to talk to parents about their financial situation, and the family business plans for what will happen if they become seriously ill or incapacitated. These conversations can be difficult—and some parents may resist the idea that they need help from their children—but they’re critically important. You’ll be better able to manage the future if you take steps to prepare for it today, by being actively involved in all personal family business matters today.
Tip #2: Empower Yourself
Who will make decisions for your parents if they can no longer do so themselves? If an emergency occurs, it can be extremely helpful if you have the power to make financial and healthcare decisions on behalf of a parent. Talk to your parents about who (if anyone) they have designated as their power of attorney. You should also find out if they have named anyone to serve as their healthcare power of attorney, or if they have a living will or other estate planning documents.
Tip #3: Prepare for Long-Term Care Expenses
Long-term care is expensive. In 2010, the average annual cost of a private room in a nursing home was more than $90,000, according a report from the Prudential Insurance Company of America.
Now is the time to find out if your parents have long-term-care (LTC) insurance and, if they do, what it covers. If they don’t have life insurance, should they buy a policy? Keep in mind, the longer you wait to buy coverage, the more expensive it will be. In addition to your parents’ long-term care needs, it may also be wise to start thinking about your own retirement and long-term-care needs. You may also want to take a good look at your own financial situation and consider how you would pay for any unexpected expenses, whether or not they’re related to long-term care.
Tip #4: Don’t Forget to Take Care of Yourself
When you’re busy taking care of both children and parents, it can be hard to think about your own needs. As much as you want to help those you love most, don’t sacrifice your own future security for them. After all, if you don’t take care of yourself, who will take care of them? Don’t neglect to fund your own retirement accounts, for example. Remember, children can borrow to pay for college (or choose a less-expensive school), but you can’t borrow to pay for retirement. Having a solid money management plan that can help you manage all your competing needs and stay on track to achieve your retirement goals.
The Advantages of Planning Ahead
When it comes to managing the challenges of caring for both children and elderly parents, you can’t underestimate the value of planning ahead. Anticipating problems before they arise—and having a plan for dealing with what could happen in the future—will ease your burden. Working with experienced professional advisors, including elder care managers, financial planners and estate planning attorneys, can also help you manage your different responsibilities without neglecting your own future.
By Chris Cooper, CFP®