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| One-in-seven middle-aged Americans is financially responsible for both a parent and a child. |
The “sandwich generation” is a term coined for families squeezed between taking care of an aging parent and raising young children or supporting adult children.
This is becoming all too common with about one-in-seven middle-aged Americans taking on financial responsibility for both a parent and a child, according to the Pew Research Center.
If you find yourself “sandwiched,” you may discover that your own retirement is at risk. Here are five steps to getting back on track:
1. Family meeting
The family meeting is simple, but effective. Many families hold financial affairs close to their chests. As a result, when a loved one becomes incapacitated or dies, family members are forced to scramble to determine final wishes and wrap up financial matters. Transparency is essential. A family meeting is the perfect time to decide who will handle what decisions.
2. Updating legal documents
A good rule of thumb is to dust off legal documents and update every five or so years. If an aging parent has an incident, or is in failing health, it is a very good time to review these documents with your parents. Laws change and life has a funny way of changing situations. The basic legal documents you should have are an updated last will and testament, living will, health-care surrogate, power of attorney, and potentially a living trust.
3.Taking financial inventory
I’ve found that families commonly think their parents were paupers, only to find out they saved very well. Besides having the ability to help with their current circumstances, there might be a looming estate-tax problem in the future. On the other hand many families have believed for decades that their parents were well off financially, only to discover they were broke and that they had unknowingly become their parent’s financial plan.
The following is a short list of information you should store in a safe place:
Incomes and survivor benefit options on these incomes if both parents are living
Monthly operating expenses
Long-term care policies
Death and marriage certificates for previous spouses
DD2-14 (discharge paperwork) to research potential benefits for seniors
Financial information: Checking accounts, CDs, brokerages, qualified accounts, and annuities
Real property including land, primary residences and other property
4. Take tours and research options
Do we move our parents into assisted living or hire caregivers? Remember there is no right or wrong answer. Facilities have come a long way since their initial creation and establishment. Home health care can be a great option as well, but families should understand that it can be a luxury to stay in one’s home. Home care may initially be cheaper but it can gradually become more expensive than a facility and taxing on family members acting as caregivers.
5. Build a long-term care plan
A long-term care plan is not a product. It’s not something someone can sell you. A long-term care plan is a strategy with an established timeline and predefined milestones. It is built upon one fundamental discovery question: “If today you became ill or injured in an accident and could no longer take care of yourself independently, how would you like to be taken care of?“
Once health-care milestones and timeliness are agreed upon, investigate care providers, confirm that your financial inventory supports this plan and meet with the family to agree on the new established plan.
These are the five steps every family should take to avoid or, at the very least, help alleviate the pain of becoming part of the sandwich generation. Preparing for illness and taking care of a sick loved one, is never an easy task. However, if you don’t plan or help your parents to plan, you could find yourself sandwiched between guilt and confusion.
Source: MarketWatch