Funding Your Retirement as a Member of the Sandwich Generation

More than half of Americans in their 40s are part of the “sandwich generation” – that is, sandwiched between supporting an aging parent and still raising children under the age of 18 (or financially assisting an older child). 

Being part of the sandwich generation comes with unique financial challenges, and research confirms this dual responsibility is overwhelming: Individuals in this generation are twice as likely to experience financial and emotional challenges compared to those solely caring for an elderly parent.¹ 

If you’re part of this unique group, there are steps you can take to get ahead of financial burdens that could impact your future well-being and retirement plans. Let’s explore some strategies to help you navigate potential challenges. 

Set a Plan for Yourself 

You’re busy taking care of others but, remember, it’s crucial to prioritize your financial well-being.  

• Adopt a “pay yourself first” approach: Make consistent contributions to your workplace retirement plan, taking full advantage of any employer match. 
• Prep for college costs: Consider 529 plans to save for your children’s education in a tax-advantaged way. 
• Explore additional retirement vehicles: IRAs provide further opportunities to grow your nest egg with potential tax benefits. Consider options like Traditional or Roth IRAs to diversify your retirement portfolio. 

Protect Your Income 

Unexpected events can derail your retirement plans. Safeguard your family’s financial future with the right insurance. 

•  Life insurance: Provides a financial safety net for your family in the event of your untimely passing. With the right policy, your family can cover outstanding debts without struggling to cover normal living expenses. 
• Disability insurance: Replaces a portion of your income if you’re unable to work due to illness or injury. The goal is to prevent a financial crisis during a difficult time. 
• Long-term care insurance: Covers the high costs of long-term care for you or your parents. This protects your assets and relieves the financial burden on your family. 

 Communicate Proactively  

It’s important to establish open communication during this time to ensure all parties are on the same page.  

• Engage in family conversations: It might feel uncomfortable at first, but it’s important to discuss your parents’ financial situation with them, including retirement savings, insurance policies, and long-term care plans. Understanding their needs and expectations helps you anticipate potential financial obligations and plan accordingly. 
• Align with your partner: Discuss your shared vision for retirement and ensure your financial goals are aligned. A unified approach to saving and spending can prevent misunderstandings and strengthen your financial foundation. 

Seek Professional Guidance 

A financial advisor can be an invaluable ally, providing personalized guidance and helping you navigate the complexities of providing for your children while caring for your parents. An advisor can help you:   

• Develop a comprehensive plan: Craft a tailored financial plan that addresses your circumstances and balances your current responsibilities with your future goals. 
• Optimize your investments: Create a diversified investment portfolio aligned with your risk tolerance and goals. 
• Minimize tax burdens: Employ tax-efficient strategies to preserve more of your money. 

Ready to Take the Next Step? 

If you need help creating a cohesive financial plan, our team is here for you. Remember, even in the midst of caring for others, you deserve to prioritize your own financial well-being. Let’s work together to build a secure future for you and your loved ones. 

SOURCE:
¹Journal of the American Geriatrics Society. (2022). A national profile of sandwich generation caregivers providing care to both older adults and children.