By: Brannon J. Fisher, CFP®
A growing number of couples and individuals today are facing the dual challenge of raising children while also providing financial and caregiving support for aging parents. Sometimes referred to as the “sandwich generation,” many of these families are dealing with both emotional and financial stress as they balance these competing responsibilities and demands.
More than two out of 10 (23%) U.S. adults are providing financial support to both a child and an aging parent, according to the Pew Research Center. What’s more, nearly half (47%) of adults in their 40s and 50s have a parent who’s 65 or older and are either raising a young child or supporting a grown child financially. About one in five of these middle-aged adults (21%) have provided financial support in the past year to a parent who is 65 or older.
It’s not just financial support — these multigenerational caregivers are spending more than two-and-a-half hours each day on average providing hands-on care for their children and a parent or parent-in-law, according to the Pew Research Center. Adult caregiving activities include things like assisting with dressing or eating, providing transportation to appointments and helping maintain their homes and/or finances.
Set Family Priorities
What are some things you and your family can do if you’re facing some of these challenges? You should start by discussing and then setting some financial and caregiving priorities for your family.
The first reaction of many couples who are faced with these challenges is to prioritize meeting the needs of their aging parents. These couples often feel that since their parents sacrificed for them when they were growing up, they owe it to their parents to do what they can to help meet their needs now that they’re older.
While this sense of loyalty and responsibility is admirable, it may present certain challenges. For most families, there are limits as to how much financial and caregiving support they can realistically provide their aging parents. For example, time that’s devoted to caregiving for a parent cannot also be spent caring for young children. The right balance must be struck between these two priorities to create harmony within the family.
Similarly, money that goes toward helping meet an aging parent’s living, medical or long-term care expenses cannot be put aside to save for children’s college educations. Every family must decide what percentage of its financial resources will be devoted to each of these competing needs.
The same thing goes for other financial goals like saving for retirement. It might seem to make sense to temporarily suspend or scale back retirement plan contributions and devote the money instead to helping aging parents financially. But doing so could disrupt a carefully laid retirement savings plan and possibly even threaten long-term financial security. Again, these tradeoffs should be discussed openly and decisions made together as a family with regard to what the right balance is for them.
Open Communication is Critical
Open and honest communication with aging parents is critical to meeting these kinds of challenges. For starters, aging parents should share as much as they are comfortable sharing about the details of their financial situation with their kids, including their total income, assets, liabilities and expenses. Then everyone can work together to create a realistic budget and determine how much financial assistance (if any) the parents actually need from their kids.
No doubt, these conversations can sometimes be hard, especially for parents who might bristle at the thought of sharing personal financial details with their kids. But it’s not fair for parents to ask adult children for financial assistance without also sharing the financial “big picture” with them. The key is for everyone to keep their emotions in check and stay focused on achieving the best possible outcome for everyone.
Once you and your spouse have made decisions about your family’s financial and caregiving priorities, you should share them openly and honestly with your parents. If your budget talks reveal that they do need financial assistance, determine to what degree you can help out, based on the priorities you have set. Similarly, if parents need caregiving help, determine how much you can realistically provide without causing too great a disruption in your household.
Long-term care (LTC) insurance can provide funds to help pay for some of your parents’ medical and other care expenses, including nursing home and assisted living expenses. These policies typically cover expenses such as occupational and speech therapy, skilled nursing care, personal care assistance (e.g., dressing and bathing) and physical rehabilitation. LTC premiums become more expensive as parents get older, so this is usually something that should be planned for and purchased long before parents need assistance.
Start Planning Now
Ideally, these conversations should take place before parents are in need of financial and caregiving assistance. By discussing sensitive issues like these ahead of time, adult children and parents can start to devise a plan for their finances and caregiving before the parents actually need assistance. This can help reduce some of the stress and strain felt by many sandwich generation families.
We can help you plan to meet the financial challenges presented by supporting aging parents while also raising a family. Please at call us at (973) 525-1000 or send an email to email@example.com if you’d like to discuss your situation.
About Brannon Fisher, CFP®
Brannon joined Simon Quick in April of 2019 and helped extend the firm’s reach into the Rocky Mountain region by establishing an office in Denver. He is responsible for new business development and works closely with the New Jersey-based Client Advisory teams to provide ongoing services to our valued clients. Brannon holds degrees from Colgate University, CU-Boulder, and Dominican University of California. He remains involved with higher education by volunteering for Greenhouse Scholars as a mentor, career advisor and selection committee member. Brannon, his wife Mandy, and his daughters Waverly and Layla enjoy a variety of active outdoor pursuits and host a revolving cast of foster pets for Mandy’s nonprofit animal rescue, Old Dogs New Digs. To learn more about Brannon, connect with him on LinkedIn.
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