The sandwich generation—adults who are caring for aging parents while also raising children—often needs to balance many, and sometimes competing, demands. Nearly half of adults in their 40s or 50s have a parent age 65 or older and are either raising a young child or financially supporting a grown child, according to the Pew Research Center. And one common concern for these adults? Health care.
“Within the elder law and estate planning community, health care planning discussions targeting the sandwich generation are common,” says Robyn Minick, Senior Wealth Planner at Wells Fargo Private Bank. “Those balancing care for parents, themselves, and children really need guidance in this area.” Here, Minick shares six important considerations for the sandwich generation to help create a health care strategy designed to work for the whole family.
1. Get on the same page
Start with an open conversation with your parents about their health and their wishes for the future, so you clearly understand their goals and needs—and so you can also share your goals and needs for the future. That way, you can work together.
“Ideally, all siblings are present so that the whole family is involved in the decisions: who will have legal authority over the parents’ health care and finances, who will cover health care expenses, and so on,” Minick says. “Show your parents you’re trying to be their advocate, and these concerns may be better received by them.”
Include your older children in the discussion, too—especially if they’re old enough to live independently. “Explain that you now have these competing demands, but also everyone’s best interest at heart,” Minick says.
2. Have your parents’ (and your own) estate plan in place
An estate plan will help ensure that your parents’ wishes—financial or otherwise—for their spouse, their children, and their grandchildren are followed. It can also help protect assets from creditors, possibly avoid probate, and create more clarity for their heirs. While you’re at it, be sure to update your own estate plan to account for your current situation. Learn more at Wealth Transfer Essentials.
3. Seek ways to help reduce your taxes
Caring for parents and children can certainly increase your expenses, but you may be able to reduce your taxable income. For example, can you claim your aging parents as dependents? Can you deduct their medical expenses? Your advisor can help guide you with these questions, and may also be able to help you with other decisions that could impact your financial plan, such as using money from a 529 plan to pay for your children’s education expenses, including K–12.
4. Learn about long-term care options
If your parents prefer to remain at home, case managers and social workers can help develop an individualized health care plan to help accomplish that goal. When it’s time to consider a nursing home or assisted living facility, Minick says, make sure you understand the differences. For example, nursing homes provide around-the-clock medical care, while assisted living facilities offer some help with daily tasks. You might also want to consider a continuing care retirement community because they can allow aging parents to live independently until they need more skilled care if their health declines.
5. Consider your own insurance needs
Your family likely relies on you financially, and life, long-term care, or disability insurance can provide a bit of a safety net if something were to happen to you. “For example, a long-term care insurance policy can help defray the costs of home care if your health deteriorates and you are unable to care for yourself and handle activities of daily living. Even if you can manage to pay these expenses out of pocket, a good long-term care insurance plan could help you preserve your other assets,” Minick says.
You might also want to consider meeting with your wealth and planning advisors to discuss your family’s financial goals including preparing for the unexpected. They can help you determine appropriate income replacement strategies or address liquidity needs if an emergency arises and you need a quick influx of cash.
6. Stay focused on your family
This all sounds stressful, but don’t forget to enjoy the time you have with your parents and children. Appreciating time with your family often becomes the sandwich generation’s most precious resource, no matter their financial situation, Minick says. “Even when my clients can afford to outsource things, they choose to be there themselves for their children and parents—not because they have to but because they want to. It’s cherishing the time they do have together.”