The Pew Research Center reports almost half of all adults in their 40’s or 50’s were either raising a child or supporting a grown child while also helping a parent 65 or older. If you are “sandwiched” between two generations who need your assistance, saving for retirement can be difficult. Caring for multiple generations isn’t new, but social policy focus and the increasing average life expectancy increase have changed emotional and financial issues. You won’t be in the “sandwich” forever. Without careful planning, however, you may miss some of your best years for saving retirement and ultimately enjoying it.
Saving for retirement while supporting your children is an art form. The kids represent your legacy, and they are walking investments. In 2015, the U.S. Department of Agriculture reported parents spent over $230,000 raising a child to the age of 18. And if you have more than one child, money may seem to go out faster than it comes in. Even if you live a frugal lifestyle, you might be surprised how expenses add up.
You love and respect your parents as much as your kids. They took care of you for years, but as they age, they’ll likely need help from you. You may discover they didn’t save for retirement and do not have enough money to cover their current expenses. With longer life expectancies and increasing medical costs in retirement, your parents may be spending more than they anticipated. Location is an additional issue requiring not just time but travel expenses. The complexity of caring for an elder can distract you from your needs, occupy your time and certainly redirect your assets.
Whatever the cause, if you are struggling to save for retirement, it’s time to get serious. You must put yourself first, like being on an airplane and putting your oxygen mask on first. Inevitably, another crisis will emerge for you, your kids, or your parents. You might think it’s all right to put your retirement savings on hold because this is a temporary situation. Chances are you will still be taking care of one generation, even if the other becomes self-supporting.
Addressing these issues before they occur is ideal, but not always possible. Our advisors at Financial Enhancement Group will help you develop strategies and provide a checklist to help you maintain your standard of living. Having an experienced fiduciary in your corner now reduces the chance of enduring a personal financial disruption in the future. Quality professionals can help you consider the hard decisions necessary to enjoy the best outcome while preparing for the worst. Our team has experience in helping you have the hard conversations with your parents and can help you set limits with your kids.
As caregivers, we may put the needs of our children and our parents before our own. But we need to remember how important it is to stay focused on our finances, retirement planning, and health. Don’t let poor retirement planning shift the costs of your caregiving onto your children.
Joseph A. Clark is a Certified Financial Planner and Managing Partner of The Financial Enhancement Group, and an SEC Registered Investment Advisor. This article was co-authored with Jamie Burton. Contact Joe at yourlifeafterwork.com or 800-928-4001. Securities offered through World Equity Group, Inc. Member FINRA/SIPC. Advisory services can be provided by the Financial Enhancement Group (FEG) or World Equity Group. FEG and World Equity Group are separately owned and operated.