Juggling the challenges of the Sandwich Generation


Life expectancies are almost five years longer today than they were 30 years ago, according to the 2011 National Vital Statistics Report, a fact that increases the likelihood you will provide some form of support for aging parents — through home care, helping out with day-to-day chores, or even covering living expenses. That role can make significant demands on your time, energy and financial resources.

The challenge is even greater if you’re also dealing with raising and educating children, grandchildren, or perhaps helping a new graduate get a start in the world. According to AARP, about 66 million Americans take care of a parent, spouse, relative or other loved one, and roughly a third are also raising a child — at the same time.

Katie Cuppia Phifer
Katie Cuppia Phifer

“While you may want to provide for everyone’s needs, it’s probably not possible,” says Deborah Eickhoff, vice president, High Net Worth Planning Group at Wells Fargo Advisors.

Still, there is good news. Consider the following four steps as you map out a strategy to help balance your family obligations without sacrificing your own financial security.

1. Prioritize your expenditures. Taking care of your parents and children at the cost of your own long-term financial security is counterproductive. If you’re looking at how to afford healthcare and living expenses for a parent, or education or living expenses for a child, it is important to explore all of your options before depleting your retirement savings. Your parents or your children may have access to more resources than you do.

“Start by creating your own retirement plan,” Eickhoff says. “Once you have that plan in place, you can figure out what you can actually afford to do for your kids and your parents.” As a Wells Fargo Advisors Financial Advisor, I utilize the Envision® investment planning process, which can help you create this plan and show you how different scenarios of helping kids and parents affect it.

2. Assess the situation. Does the thought of asking your aging parents about the way they handle their household finances — or how they’d feel about moving to a nursing home — fill you with anxiety? You are not alone.

However, it is important to develop a clear understanding of your role in your parents’ care and the finances that will have to support it. You can’t afford to delay this conversation. As your parents get older, it’s important to sit down with them and talk about their health and financial well-being — before urgent decisions are forced on you or your family.

Start by getting a handle on your parents’ current living costs, and try to estimate what the outlays will be down the road. Long-term care costs vary by state, so if you and your parents are considering assisted living or home health care, you will have to do some research for the state where they expect to retire. In South Carolina, the average annual expense today for a private room in an assisted living facility is $51,672, according to the average local cost of long-term care based on John Hancock’s Cost of Care Study, conducted by LifePlans, Inc., 2013. Individual facility costs may vary.

3. Make the most of financial resources. Spend and invest every dollar where it will do the most good. Contributions to 401(k) s, IRAs, and 529 college savings accounts offer tax benefits that can help your savings grow more quickly.  An additional consideration is a Roth IRA. A Roth IRA will generally appeal to people who want tax-deferred earnings, and are OK with the idea of making after-tax contributions now in exchange for tax-free distributions in retirement.

Long-term care insurance, which can help cover nursing home and home health care expenses, may be worth considering for your parents — or for you. Eickhoff notes that premiums on such policies rise sharply for older buyers, but the coverage is more affordable for people in their 50s and 60s.

Your parent’s financial situation may even make her eligible for certain benefits. One example is income. If your parent’s annual income is relatively low, you may be able to claim him or her as a dependent on your tax return. This may defray the cost of care. Talk with your tax advisor before doing this to see if your situation qualifies.

4. You have support. You don’t have to do the heavy lifting alone. Reach out to other family members. They may have different ideas about how to help your parents, so discuss the level of care your parents need and define your respective roles. It’s important to discuss details such as how much time, energy and money each of you is willing to contribute to help your parents. Resources such as Eldercare.gov, Caregiver.com and Medicare.gov can provide useful information and contacts. Regardless of your family’s size, know that you can find assistance to help you manage.

As more and more people face the challenges of being part of the “sandwich generation,” it is important to understand your own goals for your retirement, and the goals of your loved ones. Having a plan in place and following the above steps will help this new reality become more manageable.

This article was written by Wells Fargo Advisors and provided courtesy of Katie Cuppia Phifer, CERTIFIED FINANCIAL PLANNER™ and Financial Advisor in Beaufort, SC at 843-982-1506. Investments in securities and insurance products are: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE. Wells Fargo Advisors, LLC, Member SIPC, is a registered broker-dealer and a separate non-bank affiliate of Wells Fargo & Company. 2013 Wells Fargo Advisors, LLC.  All rights reserved.

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