“Sandwich Generation” is a term used to describe a growing group of people in their late 30s, 40s, and 50s who care for their children and their aging parents. If this definition describes you, you know that coping with all these financial obligations is a real challenge. In order to make ends meet, keep your stress low and prepare for the future, you need to have a plan for balancing your finances. Here are some tips to help you take charge of your life.
Understand Your Parents’ Finances
Talk with your parents about their essential living and discretionary costs. You should get a clear picture of your parents’ expenses, income and assets, so you know exactly what you need to provide for them now and down the road. Make sure to talk through the details as soon as possible. Don’t wait until a parent gets sick or there is a financial crisis to deal with. To prepare for the discussion, start by making a comprehensive list of their finances. Locate all their records, legal documents, bank account information and insurance policies, and make an inventory. Once you have that information, it will be a lot easier to have an open discussion with your parents about money.
Save Money for Your Retirement
It’s easy to forego your retirement plans, or to dip into your nest egg when you have to take care of your parents and your children. But sacrificing your retirement money means you’ll likely depend on your children for financial support when you retire. Don’t get caught up in that cycle. Instead, start contributing enough to your retirement plan to get the maximum match from your employer. Many people try to save at least 70 to 90 percent of their yearly income for every year of estimated retirement, so make some calculations to determine what you think you might need. Once you have a target, you can work toward building your nest egg. If you aren’t sure how much you need to save for your own retirement, talk to a financial advisor.
Review Your Parents’ Health Care
It’s a good idea to start making a plan for how to pay for your parents’ care when they can no longer take care of themselves. For people age 65 and older, there’s a high probability that they will require some type of long-term care. Keep in mind that Medicare will not cover care long-term. Get details on your parents’ health and long-term care insurance to find out if they have a good policy, and if they can afford to keep paying for it. On average, a 65-year-old retired couple will need $275,000 after taxes to cover their medical expenses. To maximize the money spent on health care, make sure your parents have a health care proxy and a living will in place, so you can better manage all their needs. Take the time to discuss your parents’ preferences for medical treatment, so you know exactly what they want.
Disability and life insurance is another health care option to consider to protect your family, should you die or become disabled.
Start an Estate Plan
Estate planning ensures that family money and assets are passed down to the right people. Gather important documents such as wills, trusts, health care proxies, and powers of attorney to ensure all your parents’ wishes and goals will be met. The plan should name an executor to carry out any tasks related to the estates. As part of the Sandwich Generation, it’s important that you have a basic estate plan in place for yourself as well.
If your day-to-day caregiving responsibilities become overwhelming, you may want to explore ways to get some assistance and lighten the load. Talk to your relatives about helping out, or consider hiring in-home care to help you get some balance in your life. When it comes to finances, if you are having a hard time getting them in order, consider talk to a financial advisor, who can help create a plan and guide you down the right path.