If you are caught between raising your kids and caring for your aging parents at the same time, you are a sandwich generation caregiver. Since people are living longer today, more Americans are caught in this difficult situation than ever before.
According to research conducted by the Pew Research Center, nearly half, or 47 percent of adults in their 40s and 50s have a parent age 65 or older and are either raising a young child or financially supporting a grown child, age 18 or older. About one in seven middle-aged adults is providing financial support to both an aging parent and a child.
This is a tough place to be, financially, as you still need to prepare for your own retirement. How do you juggle all the responsibility and costs and still save for your own future? Learn tips below.
Balancing College and Senior Living Costs as a Sandwich Generation Caregiver
More and more Americans are becoming burdened as Sandwich Generation caregivers, which can be quite costly. For example, today many Americans and retirees are outliving their resources, especially if they are in assisted living or skilled nursing care. The 2014 Genworth Cost of Care Survey notes that the yearly average cost for assisted living in the U.S. is $42,000 and nursing home care with a private room is $87,600. These exhorbitant costs can quickly deplete an older parent’s hard-earned savings — making their families vulnerable to the expenses.
In addition to costs of care for parents, ‘sandwiched’ Americans are also absorbing the costs for their children’s college education. According to the College Board, over four years will cost $129,700 for a student who entered a private college in 2013, and $38,300 for an in-state resident at a public college or university.
If you’re stuck in the middle trying to juggle your own life and career while looking after aging parents and young children, here are some financial strategies to help get you through:
1. Make Saving for Your Own Retirement a Priority
Sacrificing your own financial future will eventually backfire on you and your children. Even if you’re having trouble making ends meet, here are a few ways to make saving for yourself a priority. While finances might be tight, you’ll be glad you made yourself a priority in the years to come:
- Max out your 401(k) account and take advantage of your employer’s company match if they offer one.
- Contribute as much as you can to a Roth IRA, if you are eligible. Annual IRA contributions are allowed up to $5,500 and there are tax benefits.
- If you are 50 years or older, take advantage of the additional $5,500 allowed contribution to your 401k, in addition to the $6,500 to your IRA account/s.
2. Be Diligent About Your Child’s College Savings Plan
In addition to your retirement savings, begin putting money away for your children’s higher education expenses. Here are a few options to make saving easier:
- A 529 plan is a great way to stay organized and put away monthly savings in a plan that allows qualifying educational expenses to be distributed tax free.
- Encourage family and friends to contribute to college savings for birthday and holiday gift giving.
If you do the math, saving $100 a month for 10 years, supposing an 8 percent return; you would save $18,000 towards your child’s college education.
3. Purchase Long-term Care Insurance
Long-term care insurance can help both you and your parents. The average cost for a couple age 60 is $3,381 per year, according to the Department of Health, which is not much when you think of how expensive care can be as you age. The sooner you buy long-term care insurance, the less expensive it should be — so time is of the essence.
Put the premium payments on auto pay to avoid losing the coverage; especially since memory problems can be common with age.
4. Get Legal Paperwork in Order
Making sure legal paperwork is in order will simplify problems as your parents age. Here are the documents to address:
- Durable power of attorney
- Health care directive / power of attorney
- Health care power of attorney
- Updated wills
Even though these are difficult subjects to talk about, they are necessary legal documents to address legal authority, health care treatment options and desired distribution of assets — for both you and your parents.
5. Stay on Top of Your Finances and Get Help
Being organized is key when it comes to balancing financial responsibilities for many people. Make sure to inventory your assets, consolidate your accounts and set strict budgets to meet the demands of being a Sandwich Generation caregiver. Here are a few tips:
- Consolidate accounts and assets — Over the years, people set up multiple savings, checking, investment, credit card and retirement accounts at just as many financial institutions. Consolidate accounts so you have a good inventory and big-picture perspective for management of the funds.
- Set a budget and financial plan — Juggling multiple responsibilities and financial commitments is challenging, which is why setting a budget is so important. Set a budget that includes your mortgage, car payment, children’s needs, retirement savings and caregiving needs. You won’t be able to make it work unless you devise a diligent plan that doesn’t include maxing out your credit cards. An expert financial advisor can help you get organized for both a short-term and long-term plan.
- Enlist the help of others — It takes a village to make daily life work when you are sandwiched. Join a carpool, plan weekly reprieves with the help of sitters, connect with a financial advisor, and take advantage of resources like the National Family Caregiving Support Program.
Caring for kids and parents at the same time isn’t easy; but with diligent planning, careful organization and the help of others, you can help set yourself up for success.