If you’re raising a child and also caring for aging parents, you’re in the sandwich generation—and you’re probably already making sacrifices to meet the needs of those in your care. It’s a difficult task; research shows that members of the sandwich generation are under a huge amount of emotional and financial stress.
“Typically, people in this position are so busy caring for others that they have very little time and ability to focus on themselves and their own finances,” says Tracie McMillion, Head of Global Asset Allocation Strategy for Wells Fargo Investment Institute.
The good news: At least some of that stress is avoidable. Here, McMillion shares six common stress-inducing mistakes made by those in the sandwich generation—along with advice on how to avoid them.
Sandwich generation mistake #1: You avoid difficult conversations.
Now’s the time to ask about your parents’ needs and wishes, where they keep important documents, and what financial resources they have. These conversations can be awkward, but the information will be invaluable if an unexpected medical crisis requires you to step in. “This will also give you a better idea of how much you may need to contribute to their financial well-being as they get older,” McMillion says.
Sandwich generation mistake #2: You tap your retirement funds to cover tuition.
Sending your child to an Ivy League school should not come at the cost of your future well-being. Remember, you can take out loans for college, but you can’t borrow for retirement. “We often see people sacrificing their own financial security to support their children, whether it’s paying tuition or helping with a down payment on a house,” McMillion says. “It’s important to set limits when it comes to your children. Tell them they can’t go to the most expensive college, or if they do, they have to take on some student loan debt. That way, you won’t be a financial burden to your children later in life.”
Sandwich generation mistake #3: You do it all yourself.
Don’t be afraid to ask siblings and other family members for help, whether it’s with managing medical appointments, child care, or simply getting the break you need to care for yourself. You can also investigate in-home services to help extend a parent’s independence, whether it’s bringing in a cleaning service, getting groceries or meals delivered, or hiring someone to drive them. As your parent requires more assistance, a professional caregiver can be a lifesaver.
Sandwich generation mistake #4: You don’t consider long-term-care insurance.
It may be too late for your parents, but if you’re in your 50s or 60s, do your own kids a favor and look into purchasing a long-term-care policy. “We did a report that showed that the annual health care cost after age 85 averages nearly $35,000*,” McMillion says. “That is huge. A lot of people fail to plan for that longevity.”
Sandwich generation mistake #5: Your portfolio is too conservative.
Baby Boomers and Generation Xers often have too much cash in their portfolios, McMillion says. She recommends an emergency fund to cover six to 18 months of living expenses. If you have more than that, you may lose money relative to inflation, she says. She also emphasizes the importance of equity investments as you near retirement. “People are living so much longer,” she says. “Investing in equities can help you grow your assets. Remember, you may need to provide for yourself for as many as 30 or 40 years of retirement.”
Sandwich generation mistake #6: You don’t have an investment plan.
It’s easy to get so focused on the day-to-day demands of caring for others that you don’t plan for your own future. Make sure you meet with your financial advisor at least once or twice a year. He or she can help diversify your portfolio, make sure you’re on track for retirement, and also help you plan for expenses such as college tuition or nursing home care for your parents.
*Health Affairs, Bureau of Labor Statistics, 2016.
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