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4 financial tips for the sandwich generation

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More than half of middle-aged Americans are currently “sandwiched” between raising children and/or financially supporting adult children and caring for aging parents. Known as the Sandwich Generation, this group of 40- and 50-year olds often face financial and emotional stress trying to juggle all of these responsibilities while keeping their own goals on track. Recent trends show an increasing number of grown children are heading back home, where as of July 2022, half of 18- to 29-year-olds lived at home with one or both of their parents. To further explore the Sandwich Generation and understand how this group is supporting their loved ones, Athene conducted a study to hear from people experiencing this life stage. The study revealed that:

  • 76% of survey respondents say they’re financially supporting their adult children and 63% are providing this support to extended family as well.
  • Around 47% are putting off retirement to assist aging family members or adult children financially.
  • Half of the group is managing all or a portion of their children’s debt.
  • The main concern of this group is maintaining their standard of living in retirement.

If you’re among the millions of Sandwich Generation caregivers, you may feel you’re neglecting your own emotional health and financial needs. Here are four tips to help you better manage your finances and lower your stress levels:

1. Take care of your finances first.

Taking care of your own needs first is true when it comes to your finances. It may be tempting to pull back on retirement savings when you have immediate financial concerns for your parents or children. But an average 65-year-old American can expect to live to about age 83, and one member of a married couple may live longer. So it’s important to save enough to make sure you don’t outlive your money — potentially putting your kids on the hook to support you in the future.

At the very least, make sure you contribute enough to your 401(k) to earn your employer match. Once you’ve covered that first step, consider making an appointment with a financial professional to determine how to round out your retirement planning — whether that means additional 401(k) contributions, a traditional or Roth IRA, an annuity or a combination of these and other vehicles.

2. Work with your children on a financial plan.

According to Athene’s survey, 58% of respondents are financially preparing for their adult children to attend college. No matter your kids’ ages, they can be a part of planning for their financial futures. If your child is under 18, talk to them about your household budget, perhaps have them pay a portion of their personal expenses such as their cell phone bill, and talk to them about their post-high school plans. 

In the United States, the average cost of college tuition plus additional expenses is $35,551 per student per year — a figure that has tripled in the last 20 years. If college is going to be part of the equation, the sooner you start saving, the better. Consider working with a financial professional who specializes in college planning to help determine your best college-savings approach — as well as other steps you can take to minimize the cost of higher education.

If your adult child still needs financial assistance post-college, work with them on a budget and let them know how much you’re willing to contribute. Instead of paying down college loans or other debt for them, help them gain personal responsibility  by offering to match any loan payments they make beyond the minimum payment, for instance. Help them find ways to reduce their expenses, such as moving back home for a year or two while they focus on paying off debt or building savings.

3. Help your parents plan.

Your parents should have a plan for important legal and financial matters like retirement spending, long-term care and estate planning — including key documents like wills, trusts, advanced health care directives, and medical and financial powers of attorney. If they already have a plan, take some time to have a conversation with them to help you understand your role. If they don’t have a plan, help them work with appropriate financial and legal professionals to get a plan in place.

4. Know your limits.

Maybe you’re willing to pay for your daughter’s cell phone bill or let her live with you for her first year or two after college but need her to become more independent after that. Maybe you’re okay with helping manage your parents’ financial and legal affairs, but don’t want to provide in-home personal care.

Whatever your limits — and these may evolve over time — make sure to keep communication lines open with both your parents and your children. If you are a physical caretaker, know your limits that way also. Take the time to take care of yourself emotionally and physically to help avoid caregiver burnout.

As the saying goes, “You can’t pour from an empty cup,” Taking care of yourself first is essential to being a strong support system for your loved ones. Your financial professional can help you build a flexible financial plan that can meet life’s changing needs, allow better preparation for the unexpected and keep you on track for your own future goals.

Want additional help? Take our quiz to help you navigate caring for children, parents and yourself.

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