While the term Sandwich Generation may be unfamiliar, you, or someone you know is likely part of this growing demographic. Between the trend of people starting families later and grown children leaving the nest later, many middle-aged adults are left feeling like they are stuck in the middle of people needing their help. This pinch can leave people feeling stressed out but can also have financial ramifications. If you find yourself sandwiched, here is what you should know when it comes to your financial future.
Financially Supporting Others
Although you may think of the day-to-day things that you do to help your loved ones such as running errands, providing transportation, or advocating for health care, many people also provide financial assistance for their loved ones. According to the U.S. Census Bureau, nearly 4.3 million adults provided financial support to their parents. This is roughly the same as the amount of people who pay mandatory child support. AARP reports that aside from money contributed to aging parents, nearly half of parents provide money to adult children over age 25.
Self-Sacrifice for the Sake of Others
While both men and women are part of the Sandwich Generation, the burden of caring for surrounding generations falls heavily on women. For women in the workplace, this can mean forgoing promotions, taking lower paying jobs that offer more flexibility, or even stepping away from the workforce temporarily. The pay gap between men and women is narrowing, but women often choose caring for family over financial advancement whether it is a long-term arrangement or a temporary situation.
Caring for others can significantly affect what you save for retirement. Less saved and less growth on that money can create a huge gap in money for retirement. Time away from work or lower income can also affect pensions and Social Security. Since the squeeze of caring for others is a temporary situation, it is important to not lose sight of your own long term financial goals.
Looking out for Loved Ones
Most of us will come to a crossroad where tasks as simple as managing daily expenses or health care become difficult. People that are part of the Sandwich Generation often help their parents by becoming financial or medical advocates for their parents. When this happens, it is important to have the right authorization in place well ahead of time. Without planning, you may find yourself in a bad spot if your family member needs you to take over and they are unable to sign the necessary forms. Estate planning documents are typically drawn up by an attorney, however hospitals, doctors’ offices and financial institutions often have their own forms that they require.
Here are a few documents that you may encounter:
POA (Power of Attorney) grants someone the authority to conduct business on your behalf. Once someone has passed, this arrangement stops immediately.
POD (Payable Upon Death) or TOD (Transfer on Death) is listing a beneficiary on accounts. If someone passes away and has a POD/TOD on an account, the account will transfer directly to the beneficiary listed. This is regardless of what is stated in a will. POD/TOD can be put on anything from a checking account to real estate.
Health Care Directives tell others what kind of heath care you prefer or prefer to avoid. Although these topics can be uncomfortable, people should talk about how they should be cared for. Health Care Directives clearly spell out instructions about care if a person is close to death or has experienced a medical event they are not expected to recover from.
Wills are documents that spell out the wishes for your property as well as outlining the care of dependent children and pets.
If you are feeling sandwiched, there are resources that can help. Getting in contact with your local Aging and Disability Resource office is a great first step to helping parents. Aside from programing that can help low-income individuals, they also have resource libraries, educational events, and some have medical equipment that you can borrow for short-term needs.
Your own financial and tax advisors may also be a great resource. You may feel hesitant to ask about your family members’ situations but know that they are here to help you navigate all of the situations that arise during your phases of life.
Investment Advisor Representative
Rebecca joined the firm in 2011 as an Investment Advisor Representative. In this role, she works with clients to manage their investment assets and help them obtain their financial objectives. Rebecca brings a great deal of experience to the team having worked for several years at Marshall & IIsley Bank and MetLife. She earned a Masters of Business Administration degree (with an emphasis on finance) from Concordia University.
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