Bodysurfing with the Sandwich Generation

Wow, does it feel good to be back at the beach with those I love and without a mask. As I run along the shore this morning I can not overstate the relief and delight I feel in seeing the return of the "real" summer vacation, the intergenerational vacation. Up and down the coast, the massive, impromptu beach camps have returned and grandmothers and grandfathers have been reunited with their adult children but, even more importantly, their grandchildren! The tone on the beach is decidedly different this year, a sense of freedom and making up for lost time fills the ocean air.

I feel particularly blessed this year as my dear friend, Dave Ames, is vacationing nearby with his family and family friends. Our proximity makes for a week of great weather, world class beer and a stellar beach camp of our own. Our time away has also allowed for long, detailed conversations about family, live music and all things financial planning. There is something very rewarding about talking shop with another advisor and enjoying an Equilibrium¹ double IPA accompanied by the steady cadence of the Atlantic beating on the beach. I find it particularly rewarding as Dave and I have known one another for a long time, we share a great deal of common history, yet we both come to our work from a slightly different perspective. Dave is a planner with a large national firm while I am aligned with a privately owned independent firm. 

Both in our 50s, Dave and I will often discuss the trends that we are seeing in the marketplace. This week we couldn't help but take note of the sandwich generation all around us. Moms and dads enjoying their moms and dads while caring for their own kids. Nowhere was this more evident than in the ocean as three generations of frolickers joined one another in the rugged surf for the good old fashioned summer ritual of bodysurfing. Not unlike life in general, bodysurfing comes with its own risk/reward profile. The seemingly simple act of measuring the wave and then engaging with mother nature on a swift, wet, often pounding ride does not come without some cautionary moments as one awaits the safe emergence of their loved ones both young and old at the water's edge.

As parents, we have one of the most important jobs in the world - raising, caring for and encouraging the next generation. Some parents, however, may find that they’re sandwiched between raising their kids and caring for older loved ones. Aptly named the “sandwich generation,” those in their 40s and 50s may be feeling the pressure of being stuck in the middle. In fact, a recent study suggests almost half (47 percent) of American adults are a part of the sandwich generation.²  

If you’re a loving parent and adult child caring for parents of your own, how do you strike a balance between your financial well being, your child’s needs and your parents?

Understanding Your Situation

You may feel compelled to provide care for your aging parents in addition to raising children, meaning you don’t mind the added responsibility. But stretching yourself financially between saving for college, preparing for your own retirement and covering your parents’ costs can be a tough situation to find yourself in. And depending on how much care your kids or parents require, your income stream could be affected.

That’s why protecting your own financial standings when caring for loved ones should remain top of mind. Finding that balance is, of course, easier said than done. But here are a few ways to ease the financial toll of caring for elderly parents while being a parent of your own.

Tip #1: Build Your Support Network

Sometimes people feel like they need to shoulder all of the responsibility in caring for elderly parents. You may be the oldest sibling in your family, considered the most responsible or simply live the closest to Mom and Dad. But if you find that the caretaking is becoming too much for one person, it may be time to have a transparent and honest conversation with your siblings or other family members. They may not know just how much added responsibility you’ve taken on and they may be just as eager to help.

Family members aside, it can be beneficial to gather a team of financial professionals as well. Your financial advisor, for example, can help keep your financial priorities top of mind, while also developing a game plan for managing your caretaker responsibilities. Other professionals you may want to engage with could include an accountant, estate planning attorney, insurance agent and college planning professional.

Tip #2: Keep Your Savings Goals in Mind

Remember, you can not help others financially or otherwise if your own financial well being is in jeopardy. Trying to put a kid through college while caring for aging parents can drain your savings quickly if you aren’t careful. That’s why making your own financial goals a priority isn’t easy, but imperative.

In fact, staying focused on your long-term financial goals (like retirement) can actually be thought of as a way to protect your own kids. Emptying your retirement accounts early, or neglecting to save enough for retirement, could leave you in a bad spot later in life. In turn, your children may find themselves providing for you financially while they’re raising kids of their own. Remembering to prioritize your long-term goals now can help set you, your children and your grandchildren up for a less stressful financial future.

Tip #3: Create Boundaries For Your Children

If your kids are college-age or older, you may be able to set financial limitations with them. This won’t be easy, but it may be necessary in certain circumstances. If they don’t already work, encourage them to find a part-time job. And if they’re already earning an income, help your kids develop a budget and become as self-sufficient as possible. You may even find that when presented with the opportunity, your kids are able to rise to the challenge and learn good money habits from being less financially dependent on their parents.

If your kids are younger, start working with them to understand the importance of saving versus spending. That way, when they’re old enough to start earning money of their own, they’ll be well-prepared to work toward financial independence from you.

Tip #4: Consider Investing in a Long-Term Care Policy 

A long-term care insurance policy³ can cover a number of expenses not typically covered by health insurance. This could include assistance with activities of daily living (ADLs) such as bathing, dressing and eating. Care may be provided wherever your parents are living - at home or in a long-term care facility.

A long-term care policy is typically bought when individuals are in their 50s or 60s, as a policy can’t be obtained once a person has been diagnosed with certain debilitating conditions or diseases. Depending on your parents’ health, you may still have time to purchase a policy. If not, you may want to look into obtaining a policy for you and your spouse if you’re concerned about your own future care needs.  Long term care (LTC), particularly traditional long term care policies have significant drawbacks. Specifically, they require that the premium is paid each year, for life. Most are also limited by a "use it or lose it" definition, meaning one could pay in for many years, die without using it, and have no tangible economic value at the end. Finally, most traditional contracts also allow for the carrier to raise your required premiums in the future. Fortunately, today's LTC landscape is radically improved and today's sandwich generation has a tremendous opportunity to plan well for this critical objective with flexibility, certainty and grace.

Protecting yourself, your parents and your kids requires careful strategizing, discipline and planning. It’s a balancing act, but it’s one you don’t have to perform alone. Your financial professional can help steer you in the right direction while keeping your financial goals a priority. No parent ever wants to become an emotional or financial burden to their children. Dave and I both have tackled this important objective for our families. We urge you, our fellow sandwich generation bodysurfers, to ride the wave and do the same!

Authored by: Rob Armstrong

Dick Dale & The Del Tones "Misirlou" 1963