August 22, 2018

Financial Sanity for the Sandwich Generation

Here are four strategies to protect your financial sanity when you are part of the sandwich generation.
Dawn Doebler, MBA, CPA, CFP®, CDFA®, Senior Wealth Advisor
Sheryl Rothman, MBA, CFA®

Wikipedia, that fount of all knowledge, defines the Sandwich Generation as people, usually in their 30s or 40s, who care for their aging parents while supporting their own children. However, with lifespans increasing and parents having children later in life, we believe that the time demands of juggling the needs of aging parents and children falls mostly on those of us in our 50s. 

According to the Pew Research Center, nearly half of all adults in their 40s and 50s have a parent age 65 or older and are also either raising a young child or financially supporting a grown child. And, about one-in-seven middle-aged adults is providing financial support to both an aging parent and a child. While some parents need financial support, others may need help with the functions of day-to-day living and also may rely on their children for emotional support.

Both men and women may be part of the Sandwich Generation, but it’s women who generally lose more than men in earnings and benefits because they are more likely to leave the workforce or reduce their hours to care for family members. According to the Family Caregiver Alliance, 66 percent of caregivers are female, and the average caregiver is a 49-year-old woman who provides 20 hours of unpaid care to her mother. Not only do these obligations result in lost wages and income, but they often require immeasurable amounts of time and energy. 

What can you do to make this stage of life easier? 

1. Take care of yourself 

This is a stressful, emotional, and often overwhelming period in life. You may feel guilty about not spending enough time with either your aging parents or your kids, especially when you’re working. But, it’s important to stay healthy, both mentally and physically. Make sure you set aside time to do something that makes you happy and allows you to de-stress. 

2. Help your parents get organized 

If they haven’t already done so, help your parents organize their financial and estate-planning documents. They should share them with each other, as well as with you and any other trusted individuals. Together, they should prepare a list of all assets, liabilities, income and expenses, all insurance policies, powers of attorney, and anything else that pertains to their financials.

Passwords to websites should be kept in a safe place. If they use a password keeper, make sure they have designated someone who can access the account in an emergency.  Confirm that their bills are getting paid and that both have access to a joint bank account. Our Her Wealth In Case of Emergency Checklist will help them and you get organized, so that everyone is prepared should they become incapacitated.

We recognize that discussing finances is difficult for many families. There are many resources available to help you facilitate these discussions including: 

  • Get a copy of the book The Other Talk by Tim Prosch available here and on the AARP website.
  • Set up a family meeting for an open discussion about planning for old age.  Use our tips found in Aging Parents Aging Us: Helping Parents As They Age.
  • Find resources to learn more about the aging process. This education can be helpful in understanding what your parents are going through as they face the realities of aging. Having knowledge of the typical stages and issues that tend to arise may help you and your parents make more informed decisions along the way. One good resource is the work of MIT’s AgeLab
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3. Have a financial plan 

Take some time to focus on your own finances and create or update your financial plan. Uncertainty is often the cause of anxiety and stress, so knowing the specifics of your financial situation can be a relief. You’ll have a better idea of the financial costs to you of supporting your parents and your children and whether you can sustain this level of support without undermining your own financial health.  You may also benefit from your children being responsible with their money and having learned the basics of budgeting, saving and investing.  A good place to start is by reading Advice For Parents Who Want to Boost Their Children’s Financial IQ.

As you construct your own plan or help your parents manage theirs, one factor to consider is how to handle the risk of potential long-term care costs.  Absent long-term care insurance, choices for funding high care expenses may include selling a home, selling assets in a taxable investment account, or taking funds from retirement accounts.  No matter the funding decision, there will be tax implications.  And this is where making decisions in the midst of a crisis can be costly. Ultimately, if assets are liquidated and high taxes are triggered, the resulting asset depletion can derail an otherwise sufficiently funded retirement plan. The preferred approach is to consider the options before a crisis arises, and seek the help of a CPA or financial advisor if you are making decisions about how to pay for care. For more info, read: Weighing the Costs and Need for Long-Term Care Insurance.

4. Ask for help

Your financial advisor is a great resource to help you as you plan for your parents or support your children. Most financial advisors have worked with clients in situations like yours, so they know the questions to ask and can help you think through the financial implications and your options. They also help many clients address how to simultaneously manage aging parents and launching children, so they often understand what you’re going through.

If you find yourself helping parents with decisions about managing their housing and care choices, you may want to consider hiring an aging life professional. These specialists understand the specific nature of aging and often have an in-depth knowledge of local area care providers.  Many aging life professionals work on an hourly consulting basis which can be a cost-effective way to get support when making difficult decisions. They also specialize in helping families navigate the decision-making process if family members have differences in opinion about how to respond to the needs of aging parents. A good resource to find an aging life professional is to get referrals from your financial advisor, estate attorney, or insurance broker. 

It’s okay to rely on others—family, friends or neighbors—for help with carpools, childcare or emotional support. For those of us in the Sandwich Generation, what they say is true—it does take a village!

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Dawn Doebler, MBA, CPA, CFP®, CDFA®, Senior Wealth Advisor

Dawn’s experience spans more that 25 years providing wealth management, financial planning and corporate finance solutions for clients. As an MBA, CPA, Certified Financial Planner (CFP®), and a Certified Divorce Financial Analyst (CDFA®), she is uniquely qualified to understand the challenges and financial needs of clients from executives to entrepreneurs, as well as single breadwinner parents. Dawn is a weekly contributor to WTOP radio.