If you’re an American caring for parents and kids at the same time, you’re in the sandwich generation. In 2013, the Pew Research Center studied the sandwich generation and found “nearly half (47%) of adults in their 40s and 50s have a parent age 65 or older and are either raising a young child or financially supporting a grown child (age 18 or older). And about one-in-seven middle-aged adults (15%) are providing financial support to both an aging parent and a child.”
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While most parents have thought through their approach to rising childcare costs, very few have budgeted for the financial burden of caring for their parents. If you think the cost of college is eye-popping, wait until you see the estimated cost for elder services, like adult day care, in-home health aides, and assisted living facilities. But, there’s no time like the present to devise a plan.
Angelica Prescod of Edward Jones, Donna Tang from CreditDonkey, and Adam Garcia at The Stock Dork sat down with the Purpose of Money to offer their best advice to set yourself, your parents, and your kids up for financial success.
What You Can Do Now
Adam Garcia, a Career Coach and Financial Consultant advises, “Taking care of aging parents can be an exhausting job for anyone, mentally and financially. To ease the process, people must plan ahead.” His best advice is to “fit caregiving into your current budget rather than your future budget. Add caregiving as an item to your finances now and start saving up for it beforehand. If you budget for it now, it will ease the pressure in the future.”
To get ballpark figures, contact local facilities to price the services your parents might need most. If you have no idea where to start, browse online sites like Paying for Senior Care, Aging, and A Place for Mom to create a financial plan. Consider both their health conditions, and their own financial plans. Perhaps they have a pension or medical insurance that could help defray these costs.
While your parents are still young, ask them where they bank, have insurance and keep the deed to the house. Establish a conversation centered around trust and transparency between adults. Even though it may be difficult to discuss issues like medical directives and estate planning documents with your parents, it’s necessary to show them that you’re all grown up and it’s your turn to take care of them – no matter how much they still consider you their baby.
What to Expect fromMedicaid, Medicare, and Social Security
Donna Tang, a Budgeting Expert, reminds us that “The newer generation is often seen working multiple part-time jobs instead of a full-time job, as the former can pay more when combined.” But, this might make their income irregular or unreliable for an intergenerational family. Also, a gig approach may hinge on cash payments and tips, which don’t get calculated toward accumulating social security benefits. Hence, there is a generational divide when it comes to relying on some social services. Younger people tend to assume these benefits won’t be in place when they need them and older folks have been banking their entire futures on cashing in on these programs.
Read: How to Manage Money When Your Income Is Irregular
“These programs are reliable when it comes to taking care of elderly people,” adds Garcia. “This is especially true for Medicaid. It mostly covers long-term care through nursing homes. But there are a few other methods too. An option for home and community-based services has also been added, which covers expenses like, adult day care, home modifications, and respite care. Eligibility requirements vary state to state, and there is a thorough process to provide aid for applicants, especially the poor and needy.”
Sandwiched adults shouldn’t discount their parents’ faith in these institutions. Just because these programs might not deliver the same benefits a decade or two down the line, there’s no reason to leave these benefits on the table today. Your parents worked hard for these perks and payouts, which can certainly ease the financial burden of aging care. Look into the kinds of services and benefits your parents are entitled to and don’t give up at the first sign of resistance from a clerk or delays with an operator.
Additional Resource That May Help
Remember that some elders are also entitled to employer-led benefit systems that are no longer available to today’s employees. Consider pensions, retiree-medical insurance, and life insurance, as well as investment assets like savings bonds, which aren’t as widely used today but still hold significant value. Combine these financial tools and benefits to help your parents stay afloat.
How to Pay For Your Parents’, Kids’, and Personal Expenses
Prescod says that very careful and diligent monitoring and investing of your assets can make it possible to fund your livelihood, and your parents and family’s expenses. She advises that families consider making sound choices along these three lines:
1. Invest intelligently and as early as possible. The more financially stable you are, the stronger a foundation you can offer to the family members who rely on you.
2. Invest money for your children as early as possible, i.e., a college account or brokerage account. Any family member can contribute to these accounts, so make this a family affair. Once the children are working in high school, a Roth IRA could be an option to invest some of their earnings.
3. The sandwich generation needs the capacity to move money and invest for their parents along with multiple family members, so the responsibility is shared.
Prescod reiterates that this last point is particularly important for the long-term financial viability of an adult child balancing all their dependents. She suggests bringing “the whole family to the table. This conversation needs to not include just one person, but it should include multiple individuals who would like to see this elderly person prosper. This could include siblings, children, cousins, close family friends, anyone who would be interested in participating.”
A family-oriented “grandma fund” or “great-grandpa fund” could be held by one primary caregiver, and automatic monthly contributions could ensure that the burden is not laid solely on one household. Spread the financial commitment across all the people who love and care for this person. She says that even a contribution of just $100 per month, across a few siblings and friends, could make a huge difference in the access to care and the quality of life a beloved elder enjoys in their later years.
Author: Nafeesah Allen, Ph.D., a multi-lingual author, independent researcher, editor, and contributing writer for various national online publications. She frequently covers personal finance, family, culture, real estate, and discrimination.