Are you caring for a child as well as an aging parent? If so, you're a member of the sandwich generation — and you're probably feeling squeezed at both ends.
About one in seven middle-aged Americans is providing financial support to both an aging parent and a child, according to a Pew Research Center report. And because people are living longer and having kids later, the sandwich generation is growing. Nearly half of all adults in their 40s and 50s have a parent age 65 or older and are either raising a young child or providing financial support to an adult child, according to the same report.
Supporting both a parent and a child can take an enormous emotional, physical, and financial toll, says Jaclyn Smith, Vice President – Senior Wealth Planner at Wells Fargo Private Bank. That's why it's so important to communicate effectively and prepare. These strategies can help make it easier.
1. Honor the family dynamics of difficult conversations. "Keep in mind that your parents may be reluctant to share financial information, so it's important to explain why you're asking and create a comfortable environment for trusting and sharing," Smith says. "After all, the more information you have, the easier it will be if you're suddenly facing a medical or financial crisis."
2. Ask your parents about their financial health. Smith recommends having an honest conversation with your parents about their financial picture while they are still able to do so. What financial resources and assets do they have? What are their expenses? Do they have adequate health insurance? What about a plan for long-term care? More than half of Americans over age 65 will need long-term care at some point in their lives, according to the U.S. Administration on Aging, and nursing home costs can be astronomical.
3. Get copies of important documents. Make sure your parents have done adequate estate planning and ask for a copy of their will and trust as well as a detailed list of assets. You should also have their power of attorney and advance health directive so you can step in to handle financial matters or make health-related decisions if necessary, Smith says. Don't forget to ask about their other preferences: Do they have strong feelings about staying in their home? What are their preferences for end-of-life care?
4. Investigate tax savings. If you're already supporting your parents financially, ask your tax advisor if you can deduct their medical expenses or claim them as dependents. Also ask about changes in the 2018 tax law that may be helpful to the sandwich generation. For example, there is now a tax credit for non-child dependents. And you can now use money from a 529 plan to pay for your children or grandchildren's qualified education expenses for grades K-12, including private and religious schools, not just college tuition.
5. Engage your team. Meet with your wealth advisors to talk about balancing your children's and parents' needs with your own financial goals, Smith says. They can help you put together a list of assets you can liquidate if you need a quick influx of cash — to handle a medical crisis, for example. You can also talk about earmarking potential revenue streams to pay for upcoming expenses, like college tuition for your child or long-term care for your parents.
6. Take care of yourself. Members of the sandwich generation are often so focused on the needs of others that they forget to take care of themselves, Smith says. No matter how busy you are, make sure you still find time for the things you enjoy. Ask other family members for help or hire a professional caregiver if necessary. Seek out emotional support from friends, family, a clergy member, or a caregiver support group. "So many of us are in the sandwich generation or will be soon," Smith says. "When you're going through a stressful time, it can be extremely helpful to connect with other people who are dealing with the same thing."