Wise choice of bread
For those who are simultaneously caring for their aging parents and raising their children, it can often feel like there is never enough time, money, or energy to provide for all the family members who need you. Managing your finances in particular, with two different generations relying on you, can seem like an impossible balancing act—not to mention an exercise in guilt no matter what you do.
But being a caregiver sandwiched between two generations makes it even more important for you to prioritize your own financial needs, especially when it comes to planning for retirement. By protecting your pension during this difficult period of your life, you will be in a better position to remain independent in old age, guide your children into safer adulthood, and offer ongoing support to your parents.
Sounds impossible? Is not. Here’s how you can protect your retirement if you’re part of the sandwich generation.
Retirement savings in the first place
Retirement savings should take precedence over investing in your children’s college funds. You already know this. Your children can take out loans for college, but there are no loans available to pay for your pension.
A more difficult decision is to prioritize retirement savings over paying for your parents’ long-term care. This may seem like a heartless choice, but it’s necessary so that money problems aren’t passed on from generation to generation. Leaving retirement savings in your 40s and 50s means you miss out on long-term growth and the benefits of compound interest. By making sure that you continue to save money for retirement, you can be sure that your children will not feel financial hardship when you get older.
Instead of personally funding your parents’ care, use their assets while they last. Not only will this allow you to make the best use of programs such as Medicaid (which requires long-term care recipients to exhaust their own assets before it takes effect), but it will also protect your future.
Communication is key
Part of the stress of being part of the Sandwich Generation is that you feel like the financial burden of two generations (as well as your own) rests entirely on your shoulders. You feel like you’re letting down the vulnerable people you love if you can’t do it all. But the truth is that you I can not do it all. And you shouldn’t expect it from yourself, and your family shouldn’t expect it from you. So talking to your loved ones about what they can expect can help you set important boundaries around what you can offer them.
This conversation will be somewhat easier with your children. You can let them know what kind of financial help they can expect from you in college and beyond, and just stop there.
Talking to your parents is a little trickier, partly because you have to ask them the smallest details about their finances. Whether or not money is a taboo topic in your family, it can be difficult for your parents to let you in on important financial conversations—they feel like they changed your diapers just a few years ago.
Being aware of what your parents have accumulated, where they are, what their future plans are, and who they trust as a financial advisor will help protect them and your money. You’ll be better able to make decisions for them in an emergency, and being involved in financial decisions means you can help protect them from fraud. (See also: 5 Financial Strategies for the Sandwich Generation)
Insurance is a must
Having proper disability insurance is important insurance for any worker, but is especially important for those caring for elderly parents and young children. The Disability Awareness Council reports that nearly one in four workers will be out of work for at least a year due to a disability. Since parents and children rely on your income, even a short-term disability can be disastrous and force you to invest in retirement savings to save your life. By making sure you have adequate disability income insurance coverage, you can protect your family and your pension if you become disabled.
Life insurance is another area where you don’t want to skimp. Since two generations are counting on you, it’s important to have enough life insurance to make sure your family is okay if something happens to you. This is true even if you are a full-time unpaid caregiver for your parents or children, because your family will have to pay for the care you provide even if they don’t rely on your income.
It’s also a good idea to talk to your parents about life insurance for them if they can qualify for it. For aging parents who know they will be using their assets for long-term care, a life insurance policy can be a smart way to ensure they leave some sort of legacy. If your parents are worried about leaving an inheritance, a life insurance policy can help reduce that money stress and potentially make it easier for them to use their own assets emotionally.
Become a Welfare and Medical Care Expert
Taking the time to read about Social Security, Medicare, and others will help you make better financial decisions for your parents and yourself. There are a number of misconceptions, myths and misunderstandings masquerading as facts about these programs, and knowing exactly what your parents (and ultimately you) will be entitled to can help you make sure you don’t leave money on the table. and don’t make decisions based on bad information.
The.gov eligibility questionnaires can help you determine what benefits are available and whether your parents are eligible. Also, it’s a good idea to subscribe to my Social security account for yourself. This site will provide you with personalized estimates of future benefits based on your lifetime earnings to help you better prepare for retirement.
Don’t be afraid to ask for help
Caring for children and parents is exhausting at the same time. Don’t make the problem worse by thinking that you have to make financial decisions on your own. Consider interviewing and hiring a financial advisor to help you sort through tough choices. He or she can help you find the best way to secure your assets, help your parents spend their twilight hours, and plan for your children’s future.
Even if a traditional financial advisor isn’t right for you, don’t forget that you can call on your extended family and network of friends for help. No need to pretend that juggling all this is easy. The family can potentially offer financial or caregiving support. Knowledgeable friends can direct you to the best resources to help you make your decision. By relying on your network, you’re less likely to burn out and make messy financial decisions. (See also: 9 Simple Self-Care Acts for the Sandwich Generation)
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