The Financial Toll of the Sandwich Generation
People in the Sandwich Generation are faced with taking care of themselves, their children, and their parents, especially when parents haven’t sufficiently planned for their own financial future. Here’s how to protect your household while ensuring your parents receive needed care.
It might seem like a hopeless dilemma. How do you see to the care of three generations without shortchanging any of them? The key is making smart financial decisions.
Retirement first. It might seem selfish, but the fact is you must prepare for your retirement when you’re still relatively young. The last thing you want is to put your children in the same position you find yourself in, of having to take care of financially unprepared parents. Accordingly, you should give top priority to budgeting a fixed percentage of your monthly income for your retirement accounts.
Communicate with your parents. The best time to have a frank discussion with your parents about the care they will need is before a health crisis occurs. Take the time to gather and run the numbers to see how much care will cost and how much your parents can cover. Factor in a realistic plan for how much you can kick in for your parents’ care.
Review your insurance options. Often, the most cost-effective and feasible care plan relies on insurance. Long-term care insurance has become a big industry, with many differentiated products. For example, you can buy life insurance that can also pay for qualified long-term care costs. A reasonable course of action would be to create a cost-sharing arrangement with your parents to cover the insurance premiums.
Protect your spouse and children. You should consider what kind of insurance you need to care for your own family if something were to happen to you. Additionally, you’ll want to set aside money for your kids’ education, such as with a 529 plan. Of course, you’ll also need a short-term emergency fund in case you or your spouse is suddenly unemployed. You’ll need a realistic budget to juggle these obligations.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
The cost and availability of Life Insurance depend on many factors such as age, health, and amount of insurance purchased. In addition to premiums, there are contract limitations, fees, exclusions, reductions of benefits, and charges associated
with policy. And if a policy is surrendered prematurely, there may be surrender charges and income tax implications. Any guarantees are contingent upon the claims-paying ability of the issuing company.
This material was prepared by LPL Financial.
Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC).
Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL Financial affiliate, please note LPL Financial makes no representation with respect to such entity. If your advisor is located at a bank or credit union, please note that the bank/credit union is not registered as a broker-dealer or investment advisor. Registered representatives of LPL may also be employees of the bank/credit union. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, the bank/credit union. Securities and insurance offered through LPL or its affiliates are:
- Not Bank/Credit Union Guaranteed
- Not Bank/Credit Union Deposits or Obligations
- May Lose Value
- Not Insured by FDIC/NCUA or Any Other Government Agency