UNDERSTANDING THE FINANCIAL CHALLENGES OF THE SANDWICH GENERATION

Do you find yourself stuck between aging parents who require your financial assistance and children who depend on you to pay for their college education or post-college support? If so, you are not alone. You’re part of a rapidly growing group called the “sandwich generation.” All across the nation, there are millions of other people who are stuck in the middle, just like you.

Members of the sandwich generation are faced with some daunting financial challenges. Not only are these folks struggling to pay for their children’s college education and support their elderly parents—they’re also trying to save up enough money to cover their own retirement. It seems like a nearly impossible task for most people, especially in today’s tough economy.

Fortunately, the experts are dishing out plenty of advice for floundering sandwich generation-ers. From MetLife and AARP to Merrill Lynch and Charles Schwab & Co., numerous organizations have released some enlightening sandwich generation surveys in recent months. If you feel like you’re trapped between a rock and a hard place, take a look at some of the revelations and tips these studies have to offer.

The Surprising Statistics

Here’s just a handful of eye-opening numbers from some of the recent sandwich generation studies:

  • According to Merrill Lynch Affluent Insights Quarterly, 31% of baby boomers ages 51-64 are currently supporting, in some or most ways, both their children and parents. More than 45% of this group have had to make lifestyle sacrifices to support the needs of their family, and 26% are saving less for retirement. Another 19% have invited their adult-age children or parents to live with them to cut down on expenses.
  • Half of the Middle Boomers (the 28 million Americans ages 52 to 58) still have children living at home and 43% of them still have at least one parent alive, according to MetLife’s Mature Market Institute. Almost three in four Middle Boomers have been providing financial assistance and support to their children and grandchildren, which adds up to an average of about $38,000 over the past five years. About 14% of Middle Boomers are providing care to older parents.
  • Four in 10 sandwich generation parents continue to provide at least some financial support to their young adult children, according to a Charles Schwab & Co. survey.

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In other words, sandwich generation parents are finding themselves stretched incredibly thin. As a result, many of them are sacrificing their own retirement savings—which could lead to some serious problems down the road.

Easing the financial strain

So, how can struggling sandwich generation parents deal with all the pressure? First of all, if you’re caring for elderly parents, you’ll need to do some soul-searching. You need to pinpoint your financial priorities and start thinking about trade-offs—obviously no easy task. However, it’s important to be proactive and come up with a game plan before your situation becomes an outright crisis.

Sit down with your family members and discuss all of your financial realities and priorities. While you may feel obligated to cover all of your aging parent’s medical bills and other expenses, you should not sacrifice your own future to do so. After all, if you don’t save enough for retirement, your children may be forced to support you down the road—and you don’t want to place that kind of burden on them.

On the other side of the coin, if you’re supporting your adult children, there are some steps you can take to ease that financial squeeze as well. Studies show that many of these adult children living with their sandwich generation parents are unemployed and facing an overwhelming amount of college debt—and many of them have built up an enormous amount of consumer debt.

If that’s the case with your children, it’s important to help them develop the money skills they need to pay down their debts and get on the road to financial independence. Teach them how to budget, save and live within their means.

If they’re living at home with you, create a timeline for them to leave the nest. If they’re unemployed, help them put together their resume and apply for jobs, and explain to them that they may not be able to find their dream job right now. However, they should take some kind of job, even temp work, until they can score the job of their dreams.

Above all else, don’t go at it alone. If you find yourself sandwiched between your aging parents and your adult children and you’re struggling to make ends meet, turn to a financial advisor. An expert can give you the objective guidance you need to prioritize your fiscal challenges and ensure a financially comfortable future.

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