By Emily Guy Birken on 9 May 2019
For those who are caring for their aging parents and raising
kids at the same time, it can often seem like there's never enough time, money,
or energy to provide for all the family members who need you. In particular,
handling finances when two different generations are relying on you can feel
like an impossible balancing act — not to mention an exercise in feeling guilty
no matter what you do.
But being the caregiver sandwiched between two generations makes
it even more important for you to prioritize your own financial needs,
especially when it comes to retirement planning. By protecting your retirement
during this difficult season of your life, you'll be in a better place to
remain independent as you age, launch your kids into a more secure adulthood,
and offer ongoing support to your parents.
Sound impossible? It's not. Here's how you can protect your
retirement if you're a member of the sandwich generation.
Retirement savings comes first
Retirement savings should get priority ahead of putting money
into your kids' college funds. You know that already. Your kids can take on
loans for college, but there are no loans available to pay for your retirement.
The more difficult decision is prioritizing retirement savings
ahead of paying for long-term care for your parents. That can feel like a
heartless choice, but it is a necessary one to keep from passing money problems
from one generation to the next. Forgoing your retirement savings during your
40s and 50s means you'll miss out on long-term growth and the benefits of
compound interest. By making sure that you continue to set aside money for
retirement, you can make sure your kids won't feel financially squeezed as you
get older.
Instead of personally bankrolling your parents' care, use their
assets for as long as they last. That will not only allow you to make the best
use of programs like Medicaid (which requires long-term care recipients to have
exhausted their own assets before it kicks in), but it will also protect your
future.
Communication is key
Part of the stress of being in the sandwich generation is
feeling like the financial burdens of two generations (as well as your own) are
resting entirely on your shoulders. You feel like you'll be letting down the
vulnerable people you love if you can't do it all. But the truth is that
you can't do it all. And you shouldn't expect that of yourself, nor
should your family expect it of you. So communicating with your loved ones about
what they can expect can help you draw important boundaries around what you're
able to offer them.
This conversation will be somewhat simpler with your children.
You can let them know what kind of financial help they can expect from you for
college and beyond, and simply leave it at that.
The conversation is a little tougher with your parents, in part
because you need to ask them about nitty-gritty details about their finances.
Whether or not money is a taboo subject in your family, it can be tough for your
parents to let you in on important financial conversations — to them it feels
like they were changing your diapers only a few short years ago.
Being in the loop on what your parents have saved, where it is,
what plans they have for the future, and who they trust as their financial
adviser, will help protect their money and yours. You'll be better able to make
decisions for them in case of an emergency, and being included in financial
decisions means you can help protect them from scams. (See also: 5 Money Strategies for the Sandwich
Generation)
Insurance is a necessity
Having adequate disability insurance in place is an important
fail-safe for any worker, but it's especially important for those who are
caring for aging parents and young children. The Council for Disability
Awareness reports that nearly one in four workers will be out of work for at least a
year because of a disabling condition. With parents and children counting on
your income, even a short-term disability could spell disaster, and force you
to dip into your retirement savings to keep things going. Making sure you have
sufficient disability income insurance coverage can help make sure you protect
your family and your retirement if you become disabled.
Life insurance is another area where you don't want to skimp.
With two generations counting on you, it's important to have enough life
insurance to make sure your family will be okay if something happens to you.
This is true even if you're a full-time unpaid caregiver for either your
parents or your children, since your family will need to pay for the care you
provide even if they aren't counting on your income.
It's also a good idea to talk to your parents about life
insurance for them, if they're able to qualify. For aging parents who know they
will draw down their assets for long-term care, a life insurance policy can be
a savvy way to ensure they leave some kind of inheritance. If your parents are
anxious about their ability to leave an inheritance, a life insurance policy can
help to relieve that money stress and potentially make it emotionally easier
for them to draw down their own assets.
Become a Social Security and Medicare
expert
Spending time reading up on Social Security, Medicare, and other
programs can help you to 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 eventually you) will be entitled to can help make sure you don't
leave money on the table or make decisions based on bad information.
The eligibility questionnaires at benefits.gov can
help you determine what benefits are available and whether your parents
qualify. In addition, it's a good idea to sign up for a my Social Security account for
yourself. This site will provide you with personalized estimates of future
benefits based on your lifetime earnings, which can better help you prepare for
your own retirement.
Don't be afraid to ask for help
Caring for children and parents at the same time is exhausting.
Don't compound the problem by thinking you have to make financial decisions all
by yourself. Consider interviewing and hiring a financial adviser to help you
make sense of the tough choices. He or she can help you figure out the best way
to preserve your assets, help your parents enjoy their twilight years with
dignity, and plan for your children's future.
Even if a traditional financial adviser isn't in the cards for
you, don't forget that you can ask for help among your extended family and
network of friends. There's no need to pretend that juggling it all is easy.
Family can potentially offer financial or caregiving support. Knowledgeable
friends can steer you toward the best resources to help you make decisions.
Relying on your network means you're less likely to burn out and make
disordered financial decisions.
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