One of the greatest stressors in life can happen when you become responsible for caring for an aging parent while still supporting your own children. The Sandwich Generation is defined by the Pew Research Center as adults who have a living parent age 65 or older and are either raising a child under age 18 or supporting an adult child. Seventy-one percent of the members of this generation are age 40–59.
During the Great Recession, many in the Sandwich Generation watched as their children returned home from college either jobless or under-employed, while at the same time they were struggling to help support aging parents. Given that this generation spans all racial, gender, age, ethnic and socio-economic boundaries, the likelihood that you will end up experiencing the financial effects of the Sandwich Generation is significant.
The challenges of supporting both children and aging parents can be compounded if you are a small business owner trying to build and support your business. Building a team of family, friends, colleagues and other professionals who can help you navigate the challenges may ease your burden. Below is a checklist of steps that you can take now to be prepared for some of the financial difficulties commonly encountered.
1. Get your parents’ financial house in order. Review all your parents’ expenses with them so you can develop a plan for paying their bills in the event it becomes necessary. Review all their insurance documents and request that you receive duplicate premium notices so you can ensure that premium payments are not accidently forgotten and valuable benefits lost.
Understand the benefits available, particularly long-term care benefits, so they can begin receiving entitled benefits as soon as possible. Unfortunately, many people delay claiming benefits from the fear of depleting benefits too early. In reality, many people die with a significant portion of their benefits unused.
2. Review estate documents. Review all titling and beneficiary designations to ensure they are current. Find out where their wills, trusts, powers of attorney and advance medical directives are located. Discuss their end-of-life wishes so you are prepared to honor their requests.
Get permission from your parents to speak with their estate attorney to find out if that person has expertise in eldercare planning. If their estate attorney doesn’t, ask for a recommendation in case additional planning may be required related to Medicaid benefits.
3. Discuss housing options. This can be one of the most contentious topics for both parents and siblings if you wait until one parent is already mentally or physically incapacitated. Understand what it costs to maintain the family home and any major upgrades required in the next five to 10 years. Determine if their current location may inhibit social activity should they be unable to drive in the future.
At first glance it may seem more cost-effective for your parents to stay in their current home, but when you combine the maintenance costs with the potential for isolation, assisted living or continuing care retirement communities can become more attractive.
4. Schedule a meeting with your parents’ financial adviser. Your parents’ adviser likely has dealt with similar family situations. That person can help you navigate all the choices and decisions by providing a holistic review of your parents’ situation.
By collaborating with you, your parents and other family members, the adviser can assist in developing a strategy to meet any potential long-term care needs and connect you with other professionals that should be part of your team.
If you or your parents do not have a trusted financial adviser, look for a fee-only adviser with the CFP designation. These advisers are held to a fiduciary standard, and since fee-only advisers are paid by the client, they don’t have incentives to make recommendations influenced by commissions or other financial considerations.
5. Determine the availability of additional resources. Many cities and county governments, in addition to your state, will have an Office on Aging. These departments have developed master plans to address the needs of their aging populations. Contact your local Office on Aging to find out what community resources are available, from mobility assistance programs, to support groups and caregiver training, to respite care for the primary caregiver.
Also interview several local area geriatric care managers. Often they are highly-trained social workers or nurses. They are a wealth of knowledge regarding resources available to assist your loved one. Involve your parents in the process so they are familiar with the person who may become a daily part of their lives.
6. Don’t neglect your own retirement plan. Make sure you continue to save for your own retirement and maximize any employer benefits available to you now. Review your own financial plan annually to make sure you stay on track to meet your family and retirement goals.
Develop a backup plan in case you are forced to leave the workforce to care for a loved one. The financial toll of lost wages can be significant over your lifetime, including the impact it can have on any future pension or Social Security benefits.
The financial challenges of the Sandwich Generation will never go away, but proactive advance planning can make them more manageable and better prepare you to handle the additional stress.
Mary J. Thompson, CFP, CASL, is principal & senior adviser at FAI Wealth Management in Columbia. She can be reached at 410-715-9200.