Plan for Tomorrow | How to balance financial priorities while sandwich parenting
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How to balance financial priorities while sandwich parenting

Apr 29, 2024, 4:11:35 PM | Reading Time: 5 minutes

A growing trend seen in adults in their 40s and 50s is that, along with raising children, they are also supporting grown kids and aging parents. Known as the sandwich generation, nearly 50 percent of people in this age range are part of this group. Juggling the financial responsibilities that can go along with a multigenerational household on top of personal priorities can be a real challenge. Developing a strategy and budget that accounts for everyone’s goals is essential to minimizing stress and keeping financial goals on track.

What is the sandwich generationWhat is the sandwich generation?

The sandwich generation is a term used to describe primarily middle-aged adults who are caring for dependent children while also assisting their older parents. Younger and older age groups may fall into this category as well if they are financially or emotionally supporting family members. In addition to balancing work and family responsibilities, members of the sandwich generation may be financially supporting an older child, managing caretaking responsibilities, and providing general assistance to their parents. In today’s world, the burden of being squeezed between helping two generations can lead to high stress — both emotionally and financially.

Sandwich generation challengesSandwich generation challenges

People in the sandwich generation may struggle to balance all of their roles, whether that includes being a parent, partner, caretaker, and employee. Keeping on top of all of their priorities is no easy feat, especially if the transition to caring for aging parents was sudden. The sandwich generation may face many unique challenges, including:

  •  Trouble balancing work, relationships, home life, and personal time
  •  Financial challenges and debt
  •  Managing a multigenerational household
  •  Difficulties managing errands, kids’ schedules, and parent’s appointments
  •  Caregiver burnout
  •  Health issues due to stress

Members of this generation may also have a grown child who returns home or needs financial support as they set out on their own. When caring for others, it’s crucial to take care of yourself and take time to enjoy hobbies, spend time with friends, and ask for assistance when a break is needed. When it comes to managing money, having a solid financial plan is important to prioritizing your own goals while also supporting the financial health of your loved ones.

Using a financial plan can helpUsing a financial plan can help structure family finances

Developing a family financial plan is a useful way to lay out a budget for specific family members, identify how much money is allocated to caring for children versus caring for elderly parents, and provide a framework to get everyone on the same page. Creating a plan can also help outline the best ways to contribute to personal financial and savings goals. Helpful tips for structuring family finances include:

  •  Take inventory of each person’s financial needs and monthly expenses
  •  Assess your current sources of income and expenses
  •  Assist older children with creating a budget
  •  Review parents’ will and estate plan
  •  Identify areas where spending can be reduced

While money discussions are not always easy with parents or older children, it’s essential to managing finances successfully. Having open and honest conversations and reviewing the budget together can support greater financial independence and prevent your own financial needs from taking a backseat.

Financial planning for elderly parentsFinancial planning for elderly parents

If you’re helping manage your parent’s financial needs, there are often several factors to consider. This could include additional utility and food costs if a parent is living with you or in-home nursing care or nursing home living expenses. There may also be general medical bills and medication fees to consider, as well as added transportation costs for running a parent to appointments. If an individual is a designated power of attorney for their parents, they may also manage the parents’ day-to-day expenses, potentially adding to their own financial stress. To help minimize the stress of managing a parent’s money and financially prepare to aid aging parents, here are tips to consider: 

KKnow location of important documents & passwords

As parents age and become more dependent, it’s helpful to know where important documents like their birth certificates, Social Security cards, vehicle titles, property deeds, and bank account information are located. 

Schedule payments to cover parents’ bills

To help parents stay on top of their day-to-day expenses, it can be a good idea to help them set up options like autopay to automatically cover recurring payments without worrying about being late on a bill. 

Consider setting up a joint bank account

Setting up a joint bank account with aging parents can make it easier to manage their finances, especially if they are no longer able to do so independently. This arrangement can also help you to monitor their spending, pay bills on their behalf, and ensure that their financial needs are being met. In case of emergencies, having a joint account can also provide quick access to funds for medical expenses or other unexpected costs.

Encourage parents to create or update estate plan

Ensuring parents have outlined their will, power of attorney, and healthcare directives can make sure their assets are distributed correctly and have someone designated to make financial and legal decisions if they become incapacitated. 

Seek support of a financial professional

A financial professional can provide valuable guidance and support during family money conversations. They can assist in creating a comprehensive financial plan, provide recommendations, and offer tips for navigating financial decisions. Aging parents can gain peace of mind knowing that their finances are in good hands and that they are making informed decisions to secure their financial future.

Helping children manage their financial prioritiesHelping children manage their financial priorities

Along with assisting their parents’ financially, members of the sandwich generation can also set their children up to achieve financial independence by teaching smart money management strategies. Modeling good budgeting and saving skills and finding ways to boost financial literacy together can help children of all ages to develop an appreciation for money and your family’s financial position. Ideas for helping children manage their finances include:

  •  Encouraging them to take ownership of reaching important goals like paying off student loans, managing debt, or saving for a home.
  •  Involving them in financial decisions, such as planning for a vacation or making a big purchase
  •  Finding ways to reduce overspending and reach savings goals by using a budget
  •  Discussing ways they can contribute to household or shared expenses

Ways sandwich generation caregivers can save for the futureWays sandwich generation caregivers can save for the future

Even though financial responsibilities can be plentiful for the sandwich generation, it’s important that personal financial goals and retirement savings are put first. For many people in their 40s and 50s, they are in their peak earning years and are working toward building their savings and putting more money toward retirement. To keep these goals in the forefront, helpful habits include:

  •  Identifying short- and long-term financial goals
  •  Designing a budget around these goals
  •  Making paying down debt a priority
  •  Exploring the benefits of adding an annuity and life insurance to a financial plan
  •  Maximizing contributions to employer-sponsored retirement plan
  •  Automating transfers to savings account and retirement funds

To help reduce money-related stress and make progress toward personal money goals, members of the sandwich generation can benefit from a proactive approach to financial planning. By doing so, you not only improve your own financial security and well-being, but are more empowered to help your loved ones achieve financial stability and be better prepared for the future.

The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.

Sammons Financial® is the marketing name for Sammons® Financial Group, Inc.’s member companies, including North American Company for Life and Health Insurance®. Annuities and life insurance are issued by, and product guarantees are solely the responsibility of, North American Company for Life and Health Insurance®.