Six Strategies for Managing the Challenges of the Sandwich Generation

According to a Pew Research Study, about one in seven adults between the ages of 40 and 60 are simultaneously providing financial support to both an aging parent and a child. As these multi-generational scenarios, and the issues they can present, have become increasingly common, those in the middle have been given a name: the sandwich generation. This term references the fact that they are essentially 'sandwiched' between two different generations, who both require care and possibly physical, emotional and financial assistance.

Ages 40-60 is an important financial time, as you start to plan more seriously for your retirement goals and focus on maximizing savings. However, those in this sandwich generation can feel the pressure of supporting not only their own growing children, but also their aging parents. This can make it hard to find a balance and put a strain on attempts to prepare for retirement.

Challenges

Some financial hurdles that could impact you as a supporter of the sandwich generation include:

• Going to a single income if one spouse must stay home to handle care-giving duties
• Managing a complex budget if you're responsible for multiple people's expenses
• Saving for your own retirement and future financial goals
• Paying off household debt with the potential for multiple mortgages, medical bills, etc.
• Building up an emergency savings fund
• Determining if and how you can save for college education
• Preparing for health care, assisted living and long-term care expenses
• Handling the emotional stress of being pulled in multiple directions every day

Strategies for the Sandwich Generation

With all of this in mind, it's easy to see how this situation could be overwhelming. Here are some ideas to help navigate these situations:

• Get The Full Picture – It's important to understand where everyone stands financially. Collect hard numbers, complete a family inventory and put together a comprehensive list of how much help is needed. Doing so will help eliminate uncertainty, making it easier to create a realistic and actionable plan. Having the full financial picture will help set up the conversation about roles and responsibilities.
• Establish Honest Communication – Talking about financial topics can be difficult, especially among family members. It may be helpful to meet with a financial advisor or other professional to get things started. As you progress, keep lines of communication open about what is and isn't working and set realistic expectations, so everyone is on the same page.
• Set Priorities – Start by making your own financial security your first priority. If you aren't stable financially, supporting others can quickly become stressful and unsustainable. This can be difficult as others' needs can seem more urgent than your retirement, such as sending a kid to college or paying for a parent's assisted living. However, postponing your own savings can backfire, creating a cycle and eventually putting your children in a similar situation to the one you find yourself in now.
• Establish Financial Boundaries – Try to promote financial independence but know that doesn't mean you have to cut people off. You'll need to set boundaries to keep someone from becoming over-reliant on you. Examples of this could include a certain amount of financial support you can provide over a set period of time, such as each month or year, or agreeing to cover pre-determined expenses. Either way, set these expectations early on and understand when you have to say no, with compassion.
• Plan for Emergencies – Create financial safety nets to prepare for the unexpected. Long-term care insurance might make sense if you're worried about the cost of parents' care, which can cover nursing home and other assisted living expenses. Long-term disability insurance can help provide income if a member of the family gets sick or injured and is not able to work. Life insurance can also offer various types of living benefits, allowing you to address multiple concerns through a policy. Finally, retirement and college savings accounts can help you grow your savings over time. Look into your family's options to find the best fit for your situation as you consider these competing needs.
• Continue to Check In – Be sure to reevaluate every so often. Your family's financial goals are likely to evolve and change over time as you make progress or circumstances shift. It's wise to revisit and revise as necessary so there are no surprises, and you stay on track to achieve your long-term goals.

Ultimately, the best way to manage your position in the sandwich generation is finding a balance that works best for you and your family. This will take time and patience to settle on a plan that's sustainable for everyone involved, but the peace of mind will be well worth the effort.

At Wealth Management by CommunityAmerica, we have the resources and experience to help guide you through all of life's stages. Our friendly Wealth Advisors would be happy to answer your questions and work with you to create a financial plan that fits your unique goals and needs.