“Sandwich Generation” is the term used to describe those who are taking care of their aging parents while simultaneously raising children. If you count yourself among them, you know that shouldering the responsibility of taking care of two generations can be incredibly taxing – financially, emotionally, and mentally. However, there are steps you can take to ease your burdens, and the five strategies outlined below can help you on the financial front.
Sandwich Generation Tip #1: Practice clear and open communication
Being in the sandwich generation can be extraordinarily stressful, especially if you feel like you hold all the financial responsibility for your kids and your parents without any help. By making open and clear communication a priority for your family, however, you can feel less alone. Whether or not you’re living with your parents, make it a point to sit down and talk with them about their financial situation so that you can help them make the best decisions for their future – and ultimately for yours, as well.
Any time you have a conversation about money, you run the risk of encountering some tension or awkwardness, especially if it wasn’t a common conversation topic in your household growing up. However, getting everything out in the open will only make things easier for you in the long-run. Talk to your parents about the nuances of their financial situation. Learn how much they’ve saved, how much debt they have, any investments they hold, and what their expenses look like. You’ll also want to talk to them about whether they should be receiving any veteran’s benefits, Social Security, or Medicaid assistance, as well as if they have any long-term care plans in place.
Knowing exactly how much money your parents have, where it is, and what their plans are for the future will empower you to make better money decisions on their behalf in the event of an emergency or should anything happen.
SEE ALSO: Tips for Discussing Money with Your Aging Parents
Sandwich Generation Tip #2: Live within your means.
When you’re already juggling so much, it can seem impossible to find the time to build a household budget, with all the minutiae of your spending decisions. However, establishing a budget can give you a clear understanding of where exactly you stand financially, while also helping you pick and choose where to prioritize your saving and spending.
As you work on this, don’t shy away from making it a family affair. Involve your parents, and use it as an opportunity to teach your children the basics of budgeting and smart money habits. Involving the whole family will not only relieve you of some of the stress you’re shouldering, but it makes it easier to collectively design a plan that fits your entire family’s needs.
Sandwich Generation Tip #3. Make the most of special savings accounts.
Taking care of multiple generations means that there’s a lot demanding your financial attention. It can be difficult to think about saving if money is tight, but it’s still important to prioritize saving as much as you can afford to. Thankfully, there are savings vehicles out there that can help boost whatever you manage to store away. Tax-advantaged retirement savings accounts such as 401(k)s and IRAs are great options to help you save for retirement. See if your employer offers to match contributions and if so, be sure you’re contributing enough to take advantage of their match. Additionally, employers may offer accounts such as HSAs or FSAs that allow you to contribute a certain amount of money into an account that can be used to cover healthcare and dependent care costs.
For your kids, you may want to open a 529 Plan to help pay for any future college expenses. However, remember that it’s more important you save for your retirement than it is that you put money into a college savings account. There are a multitude of loans, grants, and scholarships your children can use to help offset the cost of college; you won’t find the same kind of support in retirement.
SEE ALSO: Maximize Your Health Savings Account for Your Financial Future
Sandwich Generation Tip #4. Be smart with your tax strategy.
If you’re in the sandwich generation, you already know that taking care of your parents requires sacrifices. However, it also comes with some benefits – especially with regard to taxes. If you’re declaring your parents as dependents, be sure that you’re making the most of the benefits available to you. You can take deductions for costs pertaining to their overall care, their medical care, and even home improvements if you’ve been forced to remodel to accommodate their needs.
If you want to be sure that you’re getting the most out of your taxes, it may behoove you to sit down with a professional to develop a tax strategy specific to your family.
Sandwich Generation Tip #5. Don’t hesitate to ask for help.
Overseeing the care for multiple generations is difficult work. It can be emotionally, financially, and mentally demanding and can leave you feeling spread thin or even exhausted. Don’t compound this stress by thinking that you’re on your own. There is no shame in asking for help.
Do your parents have other siblings who can contribute financially to their care? Do you have a close family member who can offer free childcare while you take your parents to medical appointments? If you have friends in your circle who are in the same position or have been where you are now, talk with them about any tips they may have or resources they can provide to help you. The popular phrase ‘it takes a village’ isn’t just a saying. It’s okay for you to need to depend on others to satisfy all your sandwich generation responsibilities without burning yourself out.
Securing Your Financial Future as Part of the Sandwich Generation
Along with turning to friends and family, it might be helpful to speak with a financial advisor you trust who can help you navigate the challenges that come with being part of the sandwich generation. They can work with you to create a plan that prioritizes savings, minimizes your tax burden while maximizing the benefits, and empowers your parents to make the most out of their finances in their golden years.
At Resolute Wealth Advisors, we know how important family is and how meaningful it can be to have a thoughtful, comprehensive plan in place to care for them. If you’d like to begin a conversation with one of our advisors about building a financial plan and wealth management strategy for your family, please contact us today.