It can seem impossible to care for your aging parents while raising children at the same. It can be difficult to balance finances when you have two generations depending on you. You may also feel guilty for doing anything.
It is even more crucial to prioritise your financial needs when you are the caregiver between two generations, particularly in terms of retirement planning. You’ll be better able to age independently, help your children become more independent, and support your parents by protecting your retirement.
It’s not. It’s not. You can still protect your retirement as a sandwich generation member.
First, retirement savings
Prioritizing retirement savings over college funding for your children is a good idea. You already know this. You can get a loan for college for your kids, but not for retirement.
Prioritizing your retirement savings over paying for long-term health care for parents is a more difficult choice. This may seem like a cruel decision, but it’s necessary to prevent money issues from being passed from generation to generation. If you don’t save for retirement in your 40s or 50s, you will miss out on the long-term benefits and growth of compound interest. You can ensure that your children won’t be financially squeezed by your age as you continue to save for retirement.
Use their assets to pay for your parents’ care. This will allow you to maximize the benefits of Medicaid, which requires that long-term care beneficiaries have exhausted all their assets before Medicaid kicks in. It will also help protect your financial future.
Communication is the key
Being in the sandwich generation can be stressful because you feel like the financial burdens for two generations, as well as yours, are all on your shoulders. You worry that you will let down those you care about if you don’t manage to do everything. You cannot do everything. You shouldn’t demand that from yourself or your family. Communicating with loved ones what they can expect will help you set boundaries for what you can offer.
It will be easier to have this conversation with your kids. Let them know how much financial support they can expect to receive from you, for college and beyond.
It’s a bit more difficult to talk with your parents because you have to get into the nitty gritty of their finances. Money is often a taboo topic in families, and it can be difficult for parents to share important financial information with you. They may feel like they haven’t seen their child in a while.
You and your parents will both benefit from knowing what your parents are saving, where they keep it, what they plan to do with their future and who their financial advisor is. In an emergency you’ll have more information to help them make the right decisions. You can also protect them by being involved in their financial decisions.
Insurance is a must
Disability insurance is a must-have for all workers, but especially for those caring for elderly parents or young children. According to the Council for Disability Awareness, nearly 1 in 4 workers are out of work for a minimum of one year due to a disabling health condition. Even a short-term injury could be disastrous for your family, as they rely on you. You may have to use your retirement funds to support them. If you are disabled, you can protect your retirement and family by ensuring you have enough disability income coverage.
You should not skimp on life insurance. It’s vital to ensure that your family is protected in the event of an accident or illness. Even if you are a full-time caregiver to your parents or children and don’t get paid, your family still needs life insurance.
If your parents are able to get life insurance, it’s a great idea to discuss this with them. A life insurance policy is a smart way for aging parents to leave an inheritance, especially if they know that they will be using their assets to pay for long-term health care. A life insurance policy may help relieve your parents’ financial stress, and make it easier for them emotionally to withdraw their assets.
Expertise in Social Security and Medicare
You can make smarter financial decisions by learning about Social Security, Medicare and other programs. This will help you and your parents. These programs are fraught with myths and misconceptions that can be misconstrued as fact. Knowing what your parents and you will receive is important to avoid making bad decisions or wasting money.
The benefits.gov eligibility questionnaires can help you find out what benefits are available to your parents and whether they qualify. It’s also a good idea for you to create a My Social Security Account. This site provides you with a personalized estimate of your future benefits based upon your lifetime earnings. It can help you better prepare for retirement.
Ask for help without fear
It is exhausting to care for both parents and children at the same time. Do not make the situation worse by assuming you must make all financial decisions on your own. Interview and hire a financial advisor to help you navigate the difficult choices. He or she will help you determine the best ways to preserve your assets and help your parents live out their golden years in dignity.
Don’t forget to ask your family members and friends for assistance, even if you don’t have the budget for a financial advisor. It’s not easy to juggle everything. Families can offer support in terms of financial assistance or caring for a loved one. Friends who are well-informed can help guide you to the right resources for making decisions. You’re less likely burnout and to make bad financial decisions if you rely on your network.
