Mommy on a Shoestring: Financial fitness for sandwich generation

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Updated: February 29, 2012 9:51AM

If  you are one of the many Americans “sandwiched” between caring for your children while also caring for your aging parents, you’re not alone. According to the Pew Research Center, 1 in 8 Americans between the ages of 40 and 60 are part of this “sandwich generation.” Those numbers are likely to increase as people live longer, making it more important than ever to understand the common financial pitfalls and issues associated with caring for two different generations. To get started, I asked financial advisor Jill Kaz of GCG Financial (www.gcgfinancial.com) to walk us through some of the steps we can take to help mitigate the financial stresses moving forward.

Plan ahead

According to Kaz, you need to keep the sandwich generation trend in mind when projecting the income you’ll need in retirement. This kind of planning requires more than just setting aside money in a 401(k) or glancing at IRA statements once a quarter. It means taking a realistic look at the income you’ll need in retirement as well as identifying potential obstacles that might stand in the way of ensuring your money is there when you need it.

Preserve your assets

Although it might sound selfish, you should not use your retirement savings to pay for your children’s education or your parents’ long-term care. Instead, help your children apply for student loans and use your parents’ assets to finance their care for as long as possible. Remember, you won’t be able to help anyone if you don’t keep your own financial house in order. After all, the only person who can save for your retirement is you.

Talk to your parents

“If you are 40 or older, it’s vital that you make long range plans with your parents,” says Kaz. “Keep in mind that it’s never too soon to start these discussions, but it can become too late too quickly as a loved one’s health can change overnight.” Topics to discuss with your parents include identifying assets, discussing how they want to live as they age, and understanding their wishes when it comes to long-term health care and lifesaving measures. Your parents should also name the person they want making their legal and medical decisions should the need arise. No doubt, this conversation is difficult but answering these questions while your parents are healthy can help you avoid unnecessary complications in the future.

Get insurance

The Department of Health and Human Services reports that at least 70 percent of adults age 65 and older will require some form of long-term care. Kaz recommends looking into the viability of long-term care insurance for your parents and yourself. A long-term care policy can help pay for in-home services that will help relieve some of the burden for family members. One of the main reasons people buy LTCI is to spare their spouse or children the burden of having to care for them.

Do you have Questions for Jill Kaz? Email Mommy on a Shoestring at Beth@mommyonshoestring.com and we will send your questions to her!