If you’re raising children and trying to help care for a parent too, you’re in the so-called sandwich generation. It’s a time of life when the increasing needs of aging parents and the continued needs of children can create a lot of stress—and some serious financial complications.
According to a 2013 Pew Research Center study, about half of all adults in their 40s and 50s have at least one parent over 65 and are either raising a child or supporting a grown child, with one in seven providing financial support to both a parent and a child.1 To get through this stage of life without going into significant debt, you need to plan ahead and know how to handle your finances. Here are a few things you should consider doing:
Do you know how much you’re worth? Before you can successfully plan for and/or handle the costs of being in the sandwich generation, you need to have a good understanding of your assets and debts, as well as the assets and debts of your parents.
While it might feel awkward to ask your parents about their retirement planning, you shouldn’t hesitate to do so. Make sure they have a sense of what their lifestyle will cost and, if they’re going to live on a fixed income, that they understand the financial limitations they may face.
Opening a 529 college savings plan is a smart idea, as it makes saving easier and provides tax advantages. Having a savings plan in place will also give you a good sense of which colleges your children can and cannot afford without additional financial help.
Americans turning 65 have a nearly 70% chance of requiring long-term care at some point in their future.2 This type of care can be costly, so having long-term care insurance is a good idea if your parents can qualify for and afford it. If not, you should have your own plan for what to do if one or more of your parents needs such care.
If you have kids in college, they can get a job or take out their own loans to help pay for their education. If you have a parent who needs long-term care, you may be able to handle much of it at home with the help of siblings or other family members. Don’t make the mistake of thinking it’s all on you.
Being part of the sandwich generation can be difficult. But if you understand your financial options, you have a much better chance of managing the needs of your children and parents. And, if you turn to Walden University, you can gain a level of financial acumen that can help you help others plan for and handle the sandwich generation years. In particular, an MS in Finance can give you the skills you need to advise others on their finances.