Financial Stresses and The Sandwich Generation

As my husband and I move through our thirties and towards our forties, it’s becoming more clear everyday that we really are part of the “sandwich generation.” According to SeniorLiving.com, those in the sandwich generation are those who are in a “ position to care for both their children and parents simultaneously, and this support is often both emotional and financial.” We’re on the older side of “new” parents with a 2 year old at home. Getting a relatively late start at parenthood means we are often balancing the needs of our toddler and the needs of our parents. While we aren’t physically caring for our parents quite yet, their financial well-beings are becoming ever-more entangled in ours as time goes on. For instance, in the period of one month we’ve applied for a new mortgage (we’re house-hunting), attended a financial planning meeting with a parent and made contributions to our daughter's 529 account. Three generations of financial concerns. One couple. Much Stress. Knowing we aren’t alone in this, I interviewed Financial Coach and Licensed Medicare Agent, Ashley Keimach to provide us some much-needed direction, and I’m going to share our conversation with you:

KR - Ashley, When we are setting financial goals that encompass three generations, how do we prioritize the steps we take?

AK - This is such an important question to ask before we involve ourselves in the finances of our loved ones. I believe the most important step we must take is to make sure we are in a healthy position financially. Sometimes we sacrifice our finances to help others and while this feels good to do, it will almost certainly leave us in financial ruin. If we do not take care of ourselves first, we cannot take care of others. To be more specific, we need to make sure we have a healthy emergency fund set up and are saving for retirement before we can truly help those in our life. If something happens and we cannot cover ourselves, we won’t be able to sustain the help we’re giving to others. In addition, if we are not saving for retirement, we will continue the cycle of looking to younger generations to help us with our finances. Take care of your immediate future with an emergency fund and take care of your distant future with a retirement fund.

KR - That is a great point Ashley. It’s kind of like when the flight attendant tells us to put our mask on before attempting to help another passenger. So, what is one resource you recommend utilizing to find balance in the financial stress of the sandwich generation?

AK - Managing your finances can easily become overwhelming, especially if you start adding more and more layers to your finances. These layers usually come about once we start having children, opening businesses, adding multiple streams of income, buying a home, and so much more. The sandwich generation can become even more overwhelmed with the added burden of sorting finances on behalf of their parents. Often, the financial decisions their parents are facing are completely new territory to them and thus creates confusion, stress, and even burnout. The best thing people in this situation can do is to work with a financial coach or advisor. There is no point in stressing yourself out trying to figure everything out. Working with a trusted financial coach or advisor can provide clarity and direction which in turn will help alleviate a lot of the financial stress these people are experiencing.

KR - That’s really good advice. How can folks with parents nearing retirement age help make the transition as smooth as possible?

AK - The most crucial step to ensure this transition happens smoothly, is to have what I like to call a “money meeting”. These conversations are important because they provide context and information that will help illuminate which steps need to be taken. Talking to your parents about money can be awkward, uncomfortable, and sometimes even emotionally draining. My advice is to schedule this conversation with an objective third party like a financial coach or advisor in order to more successfully gather financial information.

KR - In other words, have an expert present to guide the conversation. So, one of my parents is recently retired and another is getting close, how can transitioning to Medicare and away from an employer group health plan affect our parents’ financials?

AK - Often, the biggest financial change beneficiaries might experience when switching to Medicare is that they are now expected to take a direct role in managing their health care and are thus more aware of what things actually cost. For example, there might be co-pays they are now expecting to pay or they might not have the same drug coverage as they did on a group health plan. This can be shocking to some people and incredibly confusing which is why it is critically important to work with an expert to help make sense of these changes.

KR - Changing directions about, how do parents with young children prioritize the family’s financial goals, like a new home for instance, versus the goals we have for our children’s future?

AK - The most important thing to remember when trying to set up your children for financial success, is that children have the gift of time on their hands. This means, investing on behalf of your children, even if only a little a month, will have a positive impact on their financial future. The luxury of time means the money you are putting aside for your children has more of an opportunity to grow and compound. This is important to keep in mind because it will free you of the temptation to sacrifice your own financial goals in hopes to set up your children for success. The earlier you start investing on behalf of your children, the less money you have to throw their way. With this in mind, you can prioritize your own financial goals because any money you set aside for your children will inevitably grow because of time. It is also important to remember that one of the most important things we can do for our children is to make sure we are ok financially. If we sacrifice our own financial goals, we run the risk of needing to rely on our children as we age, thus creating another sandwich generation.

KR - Wow. I think that is my worst fear...that I will be a burden to my child. So if there is one impactful step we can take to begin setting our kids up for their financial future, what would it be?

Apart from making sure we are actively saving for retirement, the best thing we can do is to start investing on their behalf. Investing is the best way to pass down generational wealth. There are many ways we can go about doing this, but two of the most popular ways we can do this is by opening either a 529 account or by opening up either a UGMA or UTMA account. Each option has pros and cons so you’re going to want to make sure you meet with a financial advisor to discuss your options. Regardless of which option you end up choosing however, the most important thing to remember is that time is on your side. The earlier you start, the better.

In summary, Ashley really helped me realize that we don’t need to panic. My family is headed in the right direction on all fronts. However, the one piece of advice that I notice was consistent throughout my conversation with Ashley is that the financial security I have with my husband is the most important for everyone. We can’t help the younger or older generations if we aren’t secure, ourselves. As we proceed in this house hunt we’re on, that information will be especially useful to remember. If you are looking to take Ashley up on her advice to speak with a Financial Coach, you can check out all that she offers by logging on to Ashleykeimach.com. Both Ashley and I are licensed Medicare agents and can help those who are approaching Medicare eligibility learn about what types of options are out there. Having this discussion with Ashley really took my stress level down. I would highly recommend doing the same for yourself, if you too are in the sandwich generation.