Three Steps the “Sandwich Generation” Can Take to Avoid Depleting Retirement Funds

Middle aged adults are increasingly being referred to as the “sandwich generation,”  as they face the prospect of financially supporting both aging parents and young adult children, often simultaneously. In today’s financial landscape, balancing your own needs, those of aging parents, and adult children can be tricky. Before you give financial assistance to your children or parents, take these three initial steps:

1. First and foremost, make sure you’re clear on your own needs and priorities, having a defined plan to meet your goals. Analyze what you are willing and able to contribute to your parents’ and children’s wellbeing, with awareness around how any financial contribution will impact you down the road. Will giving your child money for his or her down payment mean you will have to work two additional years? Will helping your parents mean you can’t achieve some of the goals for which you’ve been saving? Know how you will need to adjust your savings and spending plan before you decide to commit.

2. Have an open, honest dialogue with your parents to discuss their financial resources, their expectations of you and your ability to contribute. As aging parents often have both limited financial resources and options to finance the increased costs of aging, it’s important to begin your dialogue with them before something unexpected occurs. When you meet with your parents discuss the following questions:

• What are their financial resources?
• What is their insurance protection?
• Is their estate plan complete?
• What are your parents’ expectations of your role in the aging process?
• What role are you willing and able to fill?

3. Have an open, honest dialogue with your young adult children which can start the transition of your role from parent and provider to that of a coach. Prepare your child for his/her future by discussing the following topics:

• If you haven’t previously discussed finances with your children, be open and honest about what you are prepared to give.
• Create realistic expectations and boundaries with your children, which in turn will allow them to adequately prepare for their future. If they expect you to fund their college, or help them with a down payment, and you don’t have the same expectations, let them know. Be up front with them as soon as possible, so they too can adequately plan for their future.
• Coach your children on how best to prepare for a sound financial future by discussing financing resources, or helping them create a savings and spending plan as they embark on their careers.

If you are interested in discussing these or other topics with your parents or adult children, feel free to contact your advisor to set up a meeting. Some of our most productive and rewarding client meetings take place with multiple generations sitting at the same table.