Navigating the Sandwich Generation

Being part of the sandwich generation – meaning you’re caring for aging parents while also raising children – can create unique challenges in shaping your financial future. 

With an aging population and a generation of young adults trying to achieve financial independence, the burdens of middle-aged Americans are increasing.

According to the Iowa State Plan on Aging, 22-percent of Iowa’s population will be over the age of 64 by the year 2030. So why does this matter to your financial planning? In a nutshell, the ageing population means more responsibility for those taking care of both parents and children. What’s more, twelve percent of parents with a child under 18 living at home also provided unpaid care for an adult, according to the Pew Research Center’s analysis of data. This can present some unique challenges, especially if you’re also providing financial support on both sides. Those in this situation are known as the Sandwich Generation.

This is problematic when trying to balance the financial goals and needs of your spouse and children against the financial needs of your parents when it comes to things like paying for health care or simply managing everyday expenses.  Adults planning for retirement are finding they’re not as emotionally and financially prepared as they need to be. If you are a part of the Sandwich Generation, here are a couple ways to help navigate through financial planning.

Balancing Your Retirement and Your Parents’ Long-Term Care Needs

It’s important to plan and save for retirement, but plans can quickly unravel when elderly parents need extra care. Long-term care is expensive. Statistics have shown that assisted living costs roughly $45,000 a year. In Iowa, long-term care costs are estimated at the following per month (according to Genworth’s Cost of Care):

Home Health Care: $4,767 p/m

Adult Day Health Care: $1,353 p/m

Assisted Living Facility: 3,847 p/m

Nursing Home Semi-Private Room: $6,083 p/m (Private room: $6,479 p/m.)

Even at home, you could expect to pay at least $20 an hour for in-home help. Providing parents’ care can have major consequences for your own retirement; from your health to your ability to afford long-term care for yourself. You can’t prevent your parents from needing care; however, you can help to protect yourself by being proactive, communicating, and planning.   

Saving More

If you’re in the sandwich generation, it’s even more important to save as much as possible. This is especially true if you have to take time off from work to care for parents. So be sure to take advantage of any and all tax-advantaged saving vehicles.

If at all possible, don’t dip into your retirement savings—whether through loans or early withdrawals—to support your kids or parents. Dipping into your nest egg sacrifices the potential for tax-deferred growth. That could eventually force you to depend on your children for financial support in retirement.

Put it in Writing

Document your plan and prepare necessary legal paperwork to make sure you’re covered — and make sure your parents’ paperwork is in order, too. If your parent suffers memory loss, they may not be able to tell you where their important financial documents are located.

And don’t forget about insurance planning. If you’re still in the workforce, check to see if your employer offers it and if you can enroll or consider an individual long-term disability insurance plan. Having life insurance in place is also important. It’s part of estate planning that many people forget but can help protect the people you love when you’re no longer here. As a full-service financial firm, the specialists at Johnson Wealth and Income Management can help you with every aspect of your financial journey.

Taking Care of You and Your Family

It’s no surprise that the research shows that sandwich generation adults often experience higher levels of stress than other adults and are more likely to say they always feel rushed or pressed for time. Self-care is not only essential for the caregiver — it is essential for the well-being of the entire family.

Tips to help you care for your loved ones – without losing sight of yourself – could include:

  • Setting boundaries of your time: Setting boundaries around your time will help you get clear about what you can and can’t do. Healthy boundaries means having sometimes to say “no” while reminding yourself that you are doing the best you can.
  • Asking for help: Whether it be from family members, or a professional caregiver, they can make a huge impact on both the older and younger family members in your life—and provide you with the respite you need to continue caring for your loved ones in the long term.
  • Practicing self-care: Taking time to recover and renew is essential. Don’t forget to address your own needs: Sleeping, eating well and caring for your mental health help you stay strong so you can care for your loved ones. Incorporate self-care, such as an exercise class, a 10-minute meditation or a hobby you love, into your daily routine.
  • Continue to plan for your own retirement: It’s critical to take care of your retirement first. Retirement planning services can help you stay on track with a personal financial plan and help guide you towards finding some balance between life’s competing priorities.

Final Thoughts

The most important facet of financial planning for the sandwich generation is to continue saving for your own retirement and financial future in spite of headwinds. Most of all, keep the communication lines open between you, your children and your parents.

Proactive planning will help reduce your financial stress if you are already dealing with the balancing act, or you simply have concerns you may be in this spot in the near future. Contact us here today for more information on our money management, lifestyle balance and retirement preparations services.


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