Have you heard of the "sandwich generation"? If not, get familiar with the term because if you are not already a member, you may be soon. If you are between the ages of 45 and 70 and have aging parents as well as children who are financially dependent on you in some way, then you are part of this "sandwich" group. Your dreams of retiring in the next decade may face significant headwind if your plan doesn't account for the cost of helping an aging parent or having a grown child still relying on you for support.
Today's 50-somethings are facing a unique challenge. They are staring retirement in the face and hoping they can achieve their goal of retiring in their early 60s. However, that plan very often does not factor in the cost of caring for an elderly parent. With longevity on the rise and the high costs for medical care and senior living today, you are likely to find yourself providing some level of support to your aging parents. This support may be physical care, financial care or emotional support; all of which can take a toll on your own retirement plan. In fact, one-third of all adults with a parent age 65 or older say that they have given a parent financial support in the past 12 months.1
If you are simultaneously supporting your own children, either in funding their college education or helping to support them well into their 20s, the situation may be exacerbated. And, while college education is something the majority of us have planned for, supporting a 30 year old, is not. Yet, research tells us that, roughly half of adults ages 40 to 59 have provided financial support to at least one grown child in the past year.1
Statistics show that this "sandwich generation" is increasing dramatically, and with that, the financial burdens associated are also rising. So, where does that leave you and your own dreams for retirement? This is what we like to refer to as a planning opportunity.
Let's start with aging parents. Do you have a good handle on your parent's financial well-being and wishes for the future? If not, there is no better time to sit down with your parents and discuss important items like: income sources, healthcare coverage, long term care planning, power of attorney. If they have a financial planner, perhaps a family meeting would be a good starting place. Hopefully, you find that their finances are in good order and you can rest easy. If you find otherwise, you can take steps to help them now and also determine what moves you can make now to help them down the road.
When it comes to supporting your adult children, this can be trickier as it is a very personal decision. However, a family meeting is also a good place to start. As your children are adults, you should have an adult conversation that includes some parameters such as work and career aspirations, a plan for sharing in household costs and duties if they are living at home, boundaries in terms of what you will and will not provide in terms of support.
In both cases, open lines of communication are key to a positive outcome. And, the sooner you identify these potential challenges and their impact on you, the better you can account for them and build them into your own financial plan. If we can help you with planning conversations or pointers, please feel free to reach out to our team.
1. Pew Research Center, 2012