More than 63 million adults in the US provide care for aging relatives, spouses with chronic conditions, or adult children with special needs.1 And many of them are also simultaneously caring for both adults and children.2 This so-called “sandwich generation” is increasing.
Though caring for loved ones is a labor of love, that doesn’t make the effort easy. One-third of Americans aged 40–60 who are sandwich generation members report feeling significant emotional, physical, and financial strain as they try to balance these dueling responsibilities.3 And that financial strain can be significant — while the average parent spends 20% of annual household income on child care, those who are also caring for seniors have a larger financial load.4
Having a close relationship with extended family is a privilege that enriches the lives of everyone involved, but the financial stress it can create should not be underestimated. Proactively preparing for the possibility of caring for an aging parent while supporting your own children will help you enjoy your time with your family while also balancing your own financial goals. The following tips can help you get started.
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Talk to your parents about finances
You may feel uncomfortable talking to your parents about their finances, but doing so will benefit you and them. Begin by letting them know you’re coming from a place of love and want the best for them.
Once they open up, discuss important questions like how much retirement income they expect and how they plan to address issues like housing and medical expenses. This will help everyone gain a clear understanding of their big-picture plan.
Explore available resources
If you believe you’ll be your parents’ primary caregiver in the near future, begin looking into available assistance. Depending on your parents’ income, they may be eligible for benefits through your state’s aging services division, Medicare, and other elder care resources.
Stay on track with your savings
When your finances are spread thin, it’s easy to put your savings strategy on the back burner. However, continuing to save is often critical for protecting your financial future. Make savings a priority and consider automating your retirement contributions. This will help ensure you don’t fall behind.
Create a spending strategy
Avoid relying on credit or regularly spending more than you can afford. Work with your family to create a realistic budget and make sure everyone commits to sticking to it. Don’t forget to account for your savings strategy and give yourself some wiggle room for unexpected expenses.
Protect yourself and your family
Life insurance is an important part of your financial strategy. Make sure you and your family are covered and your policies are up to date. This will help ensure your family is taken care of if the unthinkable happens.
Begin preparing today
Taking a multigenerational approach to financial planning can help make it easier to create, manage, and transfer wealth and support everyone in meeting their goals. That means taking an active role in not just yours and your children’s financial planning, but also that of your parents. Start early by speaking to your parents and maintaining open communication about their finances, including their retirement and estate planning. This will leave you better prepared when you need to step in to manage their care and help avoid unpleasant financial surprises. It will also allow you time to find out about your assistance options. In the meantime, begin preparing yourself by saving, budgeting, and keeping your insurance up to date. Not only will this help reduce stress, but it will also lower the chances that your children will someday become a part of the sandwich generation.