Across the U.S., millions of middle-aged adults struggle with the dual responsibilities of financially supporting children and caring for aging parents. In fact, a 2013 Pew Research report found that 33 percent of baby boomers and 42 percent of Generation Xers are now members of what is commonly being called “the sandwich generation” (cnbc.com/2014/06/14/kids-parents-sandwich-generation-savers-pressed-for-time; CNBC June 14, 2014).
The meteoric rise of the sandwich generation is a byproduct of two powerful trends: women giving birth later in life and the increasing longevity of the U.S. population. When combined with a growing number of young adults living with their parents, it’s easy to see why so many middle-aged Americans are concerned about the future.
If you are one of them, here are a few steps you can take to protect your loved ones and prepare for the financial responsibilities ahead.
Have a plan for eldercare.
Talk to your parents about the kind of care they’d prefer and discuss it with your siblings. See which, if any, family members have the capacity to help provide care and which home would be the most accessible. In case external help is needed, research local resources to see what is available – and at what cost. Most importantly, consult an attorney and make sure you have all the legal documents needed to make sudden medical and financial decisions if the need arises.
Evaluate your resources.
Before determining a course of action, make sure you know what resources are available. Can your parents pay for care on their own? Do they have long-term care insurance? Do they own any whole life insurance policies with living benefits that they may be able to use to pay for care? (Loans against your policies accrue interest at the current rate and decrease the cash value and death benefit by the amount of the outstanding loan and interest.) Can other family members contribute financially? Is public assistance a viable option?
Protect your children’s lifestyle and future.
While caring for a parent is a huge responsibility, it’s important to make sure your children’s needs are also met. If you haven’t done so already, set up a college fund and make funding it a priority. Also, consider purchasing a term life insurance policy that can help to protect your children’s future in case anything tragic happens to you.
Caring for children and aging relatives at the same time is never easy, but with the right planning and resources, it is possible to do both. With so many people joining the ranks of the sandwich generation, now’s the time to start planning for the future.
Tony Edwards is principal with WealthMark Financial Solutions, LLC, and can be reached at 334-279-1987.