Financially Survive Sandwich Generation Stress

5 Ways to Financially Survive Sandwich Generation Stress

If you’re raising kids and caring for aging parents at the same time, you are a sandwich generation caregiver. This can be hard financially as you still need to prepare for your own retirement. How do you juggle all of the costs and save for your future?

Updated on Oct 09 2019


Surviving sandwich generation stress

If you’re raising kids and caring for aging parents at the same time, you are a sandwich generation caregiver. This can be hard financially as you still need to prepare for your own retirement. How do you juggle all of the costs and save for your future?

According to research conducted by the Pew Research Center, nearly half, or 47 percent of adults in their 40s and 50s have a parent age 65 or older and are either raising a young child or financially supporting a grown child.

Financially, this is tough. You still need to prepare for your own retirement, but how do you juggle all the responsibility and costs and save for your own future?

Balancing College and Senior Living Costs as a Sandwich Generation Caregiver

More and more Americans are becoming burdened as Sandwich Generation caregivers, which can be quite costly. For example, today many Americans and retirees are outliving their resources, especially if they are in assisted living or skilled nursing care. The 2017 Genworth Cost of Care Survey notes that the yearly average cost for assisted living in the U.S. is $45,000 and nursing home care with a private room is $97,452. These exhorbitant costs can quickly deplete an older parent’s hard-earned savings – making their families vulnerable to the expenses.

In addition to parental care costs, ‘sandwiched’ Americans are also absorbing the costs for their children’s college education. According to the College Board, four years at a private college will cost $132,500 and $42,300 for an in-state resident at a public college as of 2017.

If you’re stuck in the middle trying to balance your own life and career while looking after aging parents and young children, here are some financial strategies to help get you through:

1. Make Saving for Your Own Retirement a Priority

Sacrificing your own financial future will eventually backfire on you and your children. Prioritize saving for yourself now so that you can reap the benefits later. Actionable steps to take include:

  • Max out your 401(k) account and take advantage of your employer’s company match if they offer one.

  • Contribute as much as you can to a Roth IRA, if you are eligible. Annual IRA contributions are allowed up to $5,500 and there are tax benefits.

  • If you are 50 years or older, take advantage of the additional $5,500 allowed catch-up contributions to your 401k, in addition to the $6,500 to your IRA account/s.

2. Be Diligent About Your Child’s College Savings Plan

In addition to your retirement savings, begin putting money away for your children’s higher education expenses. Here are a few options to make saving easier:

  • A 529 plan is a great way to stay organized and put away monthly savings in a plan that allows qualifying educational expenses to be distributed tax free.

  • Encourage family and friends to contribute to college savings for birthday and holiday gift giving.

If you do the math, saving $100 a month for 10 years, supposing an 8 percent return; you would save $18,000 towards your child’s college education.

3. Purchase Long-term Care Insurance

Long-term care insurance can help both you and your parents. The average cost for a couple age 60 is $3,381 per year, according to the Department of Health. The sooner you buy long-term care insurance, the less expensive it should be – so time is of the essence. Put the premium payments on auto pay to avoid losing the coverage.

Making sure legal paperwork is in order will simplify problems as your parents age. Here are the documents to address:

Even though these are difficult subjects to talk about, they are essential documents to address legal authority, health care treatment options, and desired distribution of assets.

5. Stay on Top of Your Finances and Get Help

Organization is key when you’re balancing multiple financial responsibilities. Make sure to inventory your assets, consolidate your accounts, and set strict goals and budgets to meet the demands of being a Sandwich Generation caregiver. Here are a few tips:

  • Consolidate accounts and assets - Over the years, people set up multiple savings, checking, investment, credit card and retirement accounts at just as many financial institutions. Consolidate accounts so you have a good inventory and big-picture perspective for management of the funds.

  • Set a budget and financial plan - Juggling multiple responsibilities and financial commitments is challenging, which is why setting a budget is so important. Set a budget that includes your mortgage, car payment, children’s needs, retirement savings and caregiving needs. You won’t be able to make it work unless you devise a diligent plan that doesn’t include maxing out your credit cards. An expert financial advisor can help you get organized for both a short-term and long-term plan.

  • Enlist the help of others - It takes a village to make daily life work when you are sandwiched. Join a carpool, plan weekly reprieves with the help of sitters, connect with a financial advisor, and take advantage of resources like the National Family Caregiving Support Program.

Caring for kids and parents at the same time isn’t easy; but with diligent planning, careful organization and the help of others, you can help set yourself up for success.

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