Financial Planning for the Sandwich Generation

Roughly one in seven middle-aged adults belong to the sandwich generation—people who are financially supporting an aging parent along with children of their own. It’s a tug of war that leaves many feeling burned out when it comes to their money, and it isn’t uncommon for future savings to take a direct hit. One-third of folks in the sandwich generation have less than $25,000 saved for retirement.

Taking care of each other is a human instinct to be proud of, but it shouldn’t come at the expense of our own financial well-being. The trick is filling our own cup and prioritizing our savings goals while also looking out for family. This can feel like a juggling act, but it is possible. All it takes is some intention, planning, and a shift in your mindset.

Continue Nurturing Your Career

Caregiving can have a real and lasting impact on career growth, particularly for women. Research suggests that mothers are much more likely than fathers to experience significant career interruptions to attend to family needs. It goes without saying that stepping out of the workforce translates to lost income.

Putting your retirement contributions on hold can also put a major dent in your nest egg, especially if you’re missing out on getting an employer match. What’s more, putting your work on hold means losing career momentum. But the hard truth is that your family may be in a situation where one spouse has to scale back at work to care for an aging parent or young children.

If this is the case, consider keeping one toe in the water. Is it possible to work part time or freelance around your family’s schedule? Staying connected in your industry will make it easier to reenter the workforce full time when you’re ready.

Make a Plan for Mom and Dad

As financially draining as it can be, caring for those we love isn’t something we can put off, especially if a parent is facing medical obstacles or long-term care issues. Connect with your siblings and have an open and honest conversation with your parents about their finances. The goal is to get clarity on their expenses, assets and income sources, which may include pensions, Social Security benefits, and other retirement savings.

This goes hand in hand with estate planning. When the time comes, you want to make sure they have a will that reflects their wishes so that their assets are left to the appropriate beneficiaries (instead of being tied up in probate).

Sorting out long-term care insurance is another critical part of the discussion. This type of policy can be used to cover care for an aging parent who’s no longer able to manage daily activities on their own. These services add up very quickly when you’re paying out of pocket, and regular health insurance won’t cover it.

An experienced financial advisor can help you work together to come up with a sustainable plan. If your parents need help financially, now is the time to discuss how much each sibling can contribute to their care.

Prepare for Your Kids’ Needs

Putting kids through college doesn’t come cheap, but there are some ways to ease the financial burden. A 529 savings plan lets you set money aside that grows tax-free and can be withdrawn for qualifying education expenses without being taxed. If your child gets a scholarship, you can either roll the account over for another child or withdraw the funds and pay a 10 percent fee on the growth.

Looking beyond college savings, teaching kids basic money skills is another way folks in the sandwich generation can keep their own financial life going strong. Three out of four parents have helped their adult children pay debts or living expenses, which impacts their own finances. Teaching your children about budgeting and saving now can lay the groundwork for financial independence later.

Continue Saving for Your Own Retirement and Other Goals

It’s easy to overlook your own needs when you’re in caregiving mode, but neglecting your long-term savings goals is something that’ll come back to haunt you. Putting your kids’ college savings ahead of your own retirement could very well leave you scrambling down the road. (Your children can always take out student loans, but there’s no such financing to fund your retirement.)

Connect with your financial advisor to assess where you are on your path to retirement. If you’ve gone off track caring for family, course-correct sooner rather than later. This may involve reworking your monthly cash flow in order to ramp up your retirement contributions.

The good news is that this doesn’t have to be an either/or situation. It’s more than possible to continue caring for family members in need while also practicing financial self-care and tending to your own well-being. At Opal Wealth Advisors, we understand how to cultivate this balance and help clients align their financial plan with their personal values.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Opal Wealth Advisors, LLC (“OWA”), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from OWA. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. OWA is neither a law firm, nor a certified public accounting firm, and no portion of the newsletter content should be construed as legal or accounting advice. A copy of OWA’s current written disclosure Brochure discussing our advisory services and fees is available upon request. Please Note: If you are a OWA client, please remember to contact OWA, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. OWA shall continue to rely on the accuracy of information that you have provided.

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