Sandwich generation stuck between aging parents and children

Although much attention has been given to aging baby boomers and the potential wealth transfer that follows, Generation X is feeling the strain of caring for minor children or adult children returning home and aging parents, dubbed the “sandwich generation.”

More than 54% of Americans over 40 are sandwiched between caring for their children and aging parents, according to a Pew study.

As baby boomers live longer, their adult children are tasked with caregiving responsibilities, which can be financially draining, especially if aging parents have not properly prepared.

Around 90% of the sandwich generation made financial decisions because of caregiving, like contributing less or nothing to their emergency savings and taking on more debt, according to a New York Life survey.

The financial burden the sandwich generation faces highlights the need for long-term care insurance and estate planning so their children won’t have the same fate.

Managing care for aging parents requires having the difficult conversations 

Talking about wills, estates, do not resuscitate (DNRs) and life insurance aren’t sexy topics, but it is a critical conversation that everyone should have with both parties — aging parents and adult children.

Talking about wills, estates, do not resuscitate (DNRs) and life insurance aren’t sexy topics, but it is a critical conversation that everyone should have with both parties — aging parents and adult children.

My own attempts to have conversations about estate planning with family members were typically met with responses like “why do you want to talk about death.” The reality is estate planning is a conversation about life and living — an accident can make you disabled or unable to care for yourself for the remainder of your life. 

If you are injured, temporarily ill, or disabled, who manages your finances, makes healthcare decisions for you, or raises your children? Does anyone know where your important papers are located? The time to have the conversation is not when the crisis occurs, but before.

It took years to get my mother to sit down and have a candid conversation with me and my siblings after the death of our father. Did she want a do not resuscitate (DNR)? Who did she want to be her power of attorney? What type of funeral did she want? Could we cremate her?

In the end, we had a family conversation that outlined what to do in different scenarios, prepared the necessary paperwork, informed her medical providers of her power attorney, and we all had copies of her estate documents in case of an emergency.

Generation X can be caught off guard when an unexpected illness occurs with an aging parent, especially when it comes to dementia or Alzheimers, and the ability to give consent is not available — not having a power of attorney or health care directive in place complicates getting care and making decisions on their behalf.

Women bear the brunt of caregiving responsibilities impacting the ability to save for retirement

Women are typically tasked with caregiving responsibilities, which presents an additional challenge for their own retirement planning as they live longer than men, receive less wealth transfers than men, and will need more savings for retirement, including life insurance and long-term care coverage.

Women should find a financial advisor that understands how the gender pay gap impacts their ability to save and how a longer life expectancy changes what their retirement looks like if they are expected to be a caregiver to a parent or spouse.

Women will need $165,000 for health care expenses during retirement according to Fidelity study and are more likely to have left their job or retired early due to caregiving duties, which can impact long-term earnings and savings potential.

This is the benefit of a trusted financial advisor who caters a policy based on your financial needs, budget, and situation.

Long-term care insurance options include traditional and hybrid life insurance plans

Around 60% of Americans will need long-term care at some point in their life and Medicare does not cover long-term care.

Typically, long-term care insurance has been targeted to those in their 40 and 50s.

Long-term care insurance has evolved. In addition to traditional standalone long-term care insurance, hybrid policies linked to permanent life insurance exist. Hybrid policies linked to life insurance offer the added benefit of a death payout and the ability to start and stop coverage.

There is no one-size fits all when it comes to long-term care insurance. It is best to talk to a financial advisor to go over your specific financial situation and goals.

What you fail to plan for now, will be a burden you pass on to your heirs later.

 

Ronda Lee
Founder, Editor-in-Chief
Ronda is an attorney, writer, and entrepreneur. She is a contributing writer for the Huffington Post. Originally from Chicago, she has lived in Los Angeles and New York. She loves to travel and is passionate about education equity, especially for first generation college students.