Financial Planning for Your Family’s Well-being

As a current member of the evolving Sandwich Generation spanning in age from the 30s to the 60s, you may feel the ever-challenging financial squeeze of simultaneously caring for you and your spouse, your aging parents and your dependent children. Facing the unprecedented task of holistically planning and balancing your own financial needs with the diverse considerations of your family, you do not need to be a traditional Baby Boomer (between 46 and 64 years old) to initiate, formulate, and fine-tune an actionable strategy to provide for your children, while saving for retirement and caring for your aging parents. Consider the following steps and insights in coping with Sandwich Generation dynamics and planning for the financial well-being and encompassing needs of your family.

Collaboratively assess your aging parent’s situation and review the viability of long-term care insurance and caregiving in planning.

• As early as possible, you should identify your senior parent’s core values and priorities (i.e. financial lifestyle and potential health care costs) and proactively plan to integrate them seamlessly into your multigenerational family’s financial objectives.
• Know who your aging parent’s physicians, financial planners, and legal and tax professionals are, and become well-versed in the advice and information your parents are receiving. Who should make financial, legal, and medical decisions for your elderly parents, if they are no longer capable of handling their own affairs?
• Maintain organized financial planning-relevant records (i.e. investment accounts and insurance policies) and draft the four essential estate planning documents, including a will and/or living trust, a durable power of attorney, a living will, and a medical power of attorney. Refer to Tips for Baby Boomers: Estate Planning for Aging Parents for further assistance in estate planning and caring for the diverse needs of your elderly parents and family.

• Justifiably, one of the most overwhelming financial burdens confronting the Sandwich Generation is preparing for caring of senior parents who are no longer able to live a full and independent life due to physical restrictions or mental impairment. Evaluate the cost affordability and overall suitability of long-term care insurance for your parents and yourself. Is hiring a Geriatric Care Manager (GCM) an economically feasible consideration for your aging parent in planning for the necessary kind and quality of elder care?

Focus current and future financial planning on you and your spouse’s needs in concert to fulfilling significant responsibilities of your elderly parents and dutiful children.

• Start early and make disciplined yearly tax-advantaged vehicle [i.e. 401(k), Traditional Individual Retirement Accounts (IRA), Roth IRA] retirement contributions for you and your spouse a top financial priority and avoid raiding into retirement fund savings unless necessary. Also, cultivate an investment strategy flexible to you and your spouse’s financial objectives and risk tolerance, as well as family circumstances.
• Preserve your assets and assess if the sacrifices of paying for your children’s college education or for your parent’s medical expenses would compromise you and your spouse’s overall financial well-being.
• With the guidance of a financial or legal professional, keep current and informed on shifting economic conditions (i.e. interest rate fluctuations) and relevant tax laws. Frequently review and adjust your financial strategy in life planning in relation to your family dynamics.

• In light of significant family obligations, control your debt and ensure you have sufficient short-term cash and liquid reserves (i.e. savings, money market) to fulfill your needs in the unforeseen event of an emergency.

Stress the significance of responsible money management to your dependent children and set reasonable expectations for them to eventually achieve financial independence.

• Considering that currently four in 10 Sandwich Generation parents continue to provide at least some financial support to their young adult children¹, you should educate and prime your children with the essential financial literacy skills needed to become money-savvy and secure adults.
• Delineate family financial responsibilities and cultivate exemplary lifelong financial habits by encouraging your teenage and dependent college-age children to budget, utilize credit, and control debt (i.e. pay off high interest credit card debt before paying down their lower-interest student loans). 
• Decide how you are going to pay for your children’s college education, with an array of funding options available, such as 529 qualified college tuition savings plans, prepaid state tuition plans, and Uniform Gift to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA) custodial accounts. Weigh the financial ramifications of using your retirement savings or liquidating other assets for the sake of your children’s college funding. Talk to your children about exploring qualified education financing options, including scholarships, loans, and grants, to possibly partly or fully defray for school costs.

Avoid getting caught in the middle of the Sandwich Generation and fully acquaint yourself with these tips on how to approach multigenerational financial planning!

Do not go through this process alone and seek early help to allay potential Sandwich Generation concerns. Start by enlisting the guidance of reputable and trusted financial planning, legal, tax, and senior care professionals to act as facilitators to your open interfamily conversations and ensure that family members can communicate their financial and wellness issues. With the appropriate professional assistance in early planning, you can prepare to succeed in handling Sandwich Generation challenges and ensure that your family members exercise sound judgment in effectively and cooperatively managing their finances.

FPA member Elaine King, CFP®, CDFA™, is Vice President, Director of Wealth & Well-Being at Gibraltar Private Bank & Trust. FPA member Philip Herzberg, CFP®, MSF, is Director of Media Relations & Public Awareness for FPA of Miami-Dade.

¹2010 Families & Money Survey, Charles Schwab & Co.