If you find yourself squeezed between caring for your children and caring for your aging parents, you’re part of what’s now referred to as the Sandwich Generation. It’s a scenario faced by nearly half (47%) of adults now in their 40s and 50s, according to a Pew Research Center study, and it can be a recipe for financial disaster. Here are some things you can do to help keep your finances on track, while meeting your family responsibilities.
|Prioritize your own financial situation||
As a key support for others, it’s important you stay healthy physically, mentally and financially. So, be sure you don’t short-change your own financial goals – especially saving for your retirement. It’s also really important to have a solid emergency fund of at least 3-6 months living expenses, maybe more since your obligations are greater and you’re entering a stage in your own life when it’s not unusual for health concerns to arise affecting your ability to work.
|Get a handle on your parents' finances||
Talking about money with the folks can be awkward, but you’ll be in a much better position to help if you have a thorough understanding of their financial picture. This includes checking and savings accounts, but also things like insurance policies, pensions, and assets such as a home. If they own their home or have significant equity, selling it could go a long way toward paying for their care needs if they have little retirement savings of their own.
|Divide responsibilities among siblings||
If you’re an only child, you may be stuck shouldering the entire load. But if you have brothers and sisters, be sure each is doing what they can to help your parents. If, for example, one sibling isn’t able to lend financial support, perhaps he or she can take the lead on caregiving or dealing with parents’ medical issues. Or, siblings who live too far away to participate in caregiving can be asked to contribute financial support.
|Explore student aid||
Always remember your children can get loans for college, but you can’t borrow for your retirement. So, even if you’re relatively affluent, be sure to explore all options for student aid, including grants, loans and scholarships. Having children pay at least part of their college costs also ensures they have some skin in the game.
|Don't forget the tax benefits||
If you become financially responsible for your parents, you may be able to claim them, as well as your children, as dependents on your tax returns. If you’re paying for their medical care, those costs may also be deductible since they’re dependents. Also consider looking into the Dependent Care Credit, which is available to those who pay for childcare or elder care while working.
|Get estate documents in order||
Wills and advance healthcare directives are musts for both you and your parents, but it’s also a good idea to have a financial power of attorney prepared so you’re able to step in and handle financial matters on their behalf. While these issues are always difficult to discuss, it’ll make things easier on everyone in the family if your parents also make their wishes clear in advance regarding final arrangements when they pass away.