The “sandwich generation” is the name for people who find themselves caught between caring for children and aging parents. This can be extremely challenging financially and logistically, but planning ahead can help mitigate some of those challenges. Most importantly, everyone will need to take some responsibility for their financial security.
Work with Parents on Retirement Planning
Talk to your parents about their retirement planning. Some parents may not be comfortable having this conversation with their children, but if there is any chance at all that you will end up providing some money and caregiving to them, it is important that you are all on the same page. You may want to talk about retirement accounts, Social Security and whether there is a plan for long-term health care. You may also want to consider bringing a financial professional to these meetings who can help in creating a retirement budget.
Work with Children on Financial Planning
The sooner you teach your children to be financially responsible, the better off you will all be. Whether or not you have been able to save any money for your child’s college education, your child may need to take out student loans to pay for tuition. These might come from the federal government or from private lenders. Your children should also understand the basics of using a credit card and how to avoid falling into credit card debt. As with your parents, you may want to work with your children on creating a budget.
Saving for Your Own Retirement
It can be tempting to borrow from your retirement plan or stop saving for retirement altogether when you are struggling to help both your parents and your children, but it is important to resist this temptation. You can’t neglect self-care during this time, and this includes financial self-care. If you are still tempted to dig into your retirement savings, ask yourself this: do you want your children to someday be in the same position you are in? By pushing them to take on more adult responsibilities instead of relying on you for money, you can help ensure that you have the means to retire without their help later in life.
Create an Estate Plan
Although it may feel like no one will be able to manage without you around, you’ll need to imagine just such a scenario in order to put the necessary protections in place for your loved ones. In addition to a will or a trust, your estate plan should include such documents as powers of attorney that appoint others to make decisions about your health care and finances if you cannot. You may also want to talk to your parents about estate planning. This can be a difficult conversation, but if they don’t have the right documents in place or their documents are out of date, it can mean more stress for you later. Careful estate planning is part of an overall sound financial strategy that prioritizes the needs of loved ones over the long term.