Today, there is significant financial burden on the so-called sandwich generation. Responsible for the care and well-being of at least one child and at least one parent over 65, this generation of adults aged 40 to 60 is often described as being overworked and underfinanced, continually sacrificing for their families, and under tremendous stress. According to Forbes, on average 48 percent of adults provide some level of financial support to their grown children while 25 percent are also doing the same for their parents. Here are just a few other eye-opening financial realities for sandwich generation adults, according to a Policygenius poll:
- 29 percent are very stressed, and 37 percent somewhat stressed about meeting family financial needs over the next 10 years.
- To pay for their parents’ long-term care 48 percent would use Medicare (and may later learn it doesn’t cover such care), 18 percent would self-pay, and 19 percent don’t have a plan.
- To care for parents, 33 percent would take on debt, 40 percent would use their savings, and 40 percent would decrease spending on themselves.
With seniors living longer, more children moving back with their parents after college, rising housing costs, and an unpredictable economic landscape, today’s sandwich generation faces even steeper financial responsibilities and challenges. It’s little wonder many of them have deferred saving for their own retirement, feel they are unable to live the life they envision for themselves, and wake up in a panic wondering “What if Mom falls and needs long-term rehab?” or “How can we afford to give our child their dream wedding?”
Multi-generational financial planning as the key to financial security
Initially, the sandwich generation may be averse to adding multi-generational financial planning to their already full plate of responsibilities. However, it’s important to understand the impact strong financial and wealth management strategies can have. At Diamond State Financial Group, our financial advisors constantly experience the way alleviating financial stress trickles down to easing physical and emotional stress too. Our main objective is to give the sandwich generation financial security and confidence that they can properly take care of their families and themselves. Speaking in general terms, we work toward their parents having the means to enjoy retirement and cover healthcare and end-of-life care needs, their children getting started on financially responsible paths, and them starting or building their retirement fund.
Twenty-four percent of the sandwich generation has never discussed future financial needs with their parents
Professionals in multi-generational financial planning will do far more than just advise you to “save here,” or “invest there.” We understand that, while members of the sandwich generation may be fully onboard with having a solid financial plan, the subject can be a mountain to climb with younger and elder generations. Seniors, especially those who have lived through depressions and recessions, can have trepidations about investing their hard-earned money or trusting others with their financial future. They also often prioritize saving money to leave to their children—at the sacrifice of paying for their own care. Multi-generational planning with our financial advisors will help you understand the value in planning, then provide the tools to start those hard, but critical, conversations with loved ones.
Next, we work with you and, possibly, other family members to outline your needs—such as current responsibilities, student loans, and anticipated senior care needs—and wants, such as your ideal retirement age and lifestyle. From here we map out a financial strategy that will work to achieve these needs and wants while also helping to ensure that, while your assets are secure and growing, you have the finances to support everyday living and unexpected expenses.
If you are a member of the sandwich generation, the right financial strategies can open a world defined by less stress and more financial freedom. It can mean the difference between your parents receiving adequate care in a state-run facility and exceptional care somewhere more suited to their needs and tastes; or, between your children “never leaving the nest” and them having the financial foundation for starting families of their own. It can mean the difference between you working well past your desired retirement age and you retiring in comfort and with money to travel, upgrade to that modern kitchen, and go after the things you deserve.
No matter what phases of life your family is in, it’s important for sandwich generation adults to start the financial conversation with their parents and children. In addition, consider the value of multi-generational financial planning with a professional. The sooner you begin, the greater the impact it can have on the financial security of everyone you care about.
This article has been co-authored by financial advisors at Diamond State Financial Group specializing in multi-generational financial planning. Neil Stalter, CFP, ChFC, RICP, CBEC, CDFA, is a Partner and Wealth Manager focusing on individuals nearing retirement and business owners. James Baker, Jr., CFP, ChFC, is a Senior Associate and Wealth Manager working with pre-retirees, business owners, and medical professionals. Allison Oberembt, CFP, is a Financial Advisor focusing on supporting individuals preparing for retirement, business owners, and medical professionals.
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