At a time when your career is reaching a peak and you’re looking ahead to your own retirement; you may find yourself having to help your children with college expenses while at the same time looking after the needs of your aging parents.
Congrats! You’ve joined the ranks of the sandwich generation.
This is no longer just a Gen X story. 1 in 4 Americans currently have a child under 18 and a living parent, with nearly half of Millennials now part of the sandwich generation alongside 18% of Gen Xers. Millennials are hitting this wall earlier than previous generations and often with less financial cushion to absorb the pressure.
The strain is real and growing. The same study found that 75% of sandwich generation caregivers say it’s hard to juggle their financial needs and goals, and 59% have reduced or stopped contributing to their retirement savings as a result. That’s a large long-term cost that often goes unrecognized in the day-to-day grind of caregiving.
What Challenges Will You Face?
Here are some things you can expect to face as a member of the sandwich generation today:
- Your parents may need assistance as they become older. Higher living standards mean increased life expectancy, and you may need to help your parents prepare adequately for the future.
- If your family is small and widely dispersed, you may end up as the primary caregiver for your parents.
- If you’ve delayed having children to focus on your career first, your children may be starting college at the same time your parents become dependent on you for support.
- You may be facing the challenges of boomerang children who have returned home, driven by rising housing costs and student debt rather than just divorce or job loss.
- Like many individuals, you may be carrying debt, facing retirement savings gaps, and navigating uncertainty around the future of Social Security.
What Can You Do to Prepare?
Holding down a job and raising a family is hard enough without the added weight of caring for aging parents. But if you take some time now to determine your goals and build a flexible plan, you’ll save yourself stress, and expense, in the years ahead.
- Start saving for college as early as possible.
- Work to control your debt. Installment debts like car payments, credit cards, personal loans, student loans should account for no more than 20% of your take-home pay.
- Review your financial goals regularly and adjust your plan to accommodate unexpected events, such as a career change or a parent’s illness.
- Protect your own retirement. Put as much as you can into a retirement plan where your savings, which may be matched by your employer, grow tax-deferred. Reducing or stopping contributions now has a long-term cost that’s difficult to recover from.
- Encourage realistic expectations among your children about college costs. Their desire to attend an expensive school will add to your stress if the finances don’t support it.
- Talk to your parents about the provisions they’ve made for the future. Do they have long-term care insurance? Adequate retirement income? Know where their documents are and who they rely on for advice and support.
Caring for Your Parents
Much depends on whether a parent is living with you or out of town. If your parent lives at a distance, you have the responsibility of monitoring their welfare from afar. To reduce your stress, involve your siblings, if you have them, in sharing the responsibility. If your parent’s needs are great, consider hiring an Aging Life Care Professional, who can help oversee your parent’s care and connect you with the community resources they need.
If your parent needs to move in with you, keep these points in mind:
- Share all your expectations in advance. A parent will want to feel part of your household and may be happy to take on some responsibilities.
- Ensure your parent has a separate room and phone for privacy.
- Work with other family members to share the caregiving load, including providing temporary relief when you need a break.
Considering the Needs of Your Children
Your children may be feeling the effects of your situation more than you realize, especially teenagers. Here are some things to keep in mind:
- Explain what changes may come about as you begin caring for a parent. Children generally adjust well once their questions and concerns are addressed.
- Discuss college plans honestly. They may need to adjust expectations or contribute through part-time work.
- Avoid dipping into your retirement savings to pay for college. Your children can repay loans with future income; your retirement savings may be your only safety net.
- If you have boomerang children at home, share expectations clearly, including a target date for their moving out.
Don’t Forget Yourself
Most importantly, take care of yourself. Get enough rest. Stay connected with friends and outside interests. Keep lines of communication open with your spouse, parents, children, and siblings. And make sure your own financial plan doesn’t become the casualty of everyone else’s needs because your long-term security matters too.
