The "sandwich generation" are coping with balancing their own needs with the needs and expectations of family. Current research shows that 44% of Americans between the ages of 45 and 55 have living parents or in-laws, as well as children under age 21. Many of these individuals are direct caregivers - with 64% of caregivers also employed full-time or part-time.
Within the next decade, the population over age 65 will continue to grow, according to U.S. Census reports. Increasing life expectancies also means that more people are likely to have chronic health problems and family involvement in their care. Today, an estimated 7 to 10 million adult children are providing care and assistance for their parents long-distance. And, approximately 92% of boomers financially support an adult child in one or more ways. This sandwich situation calls for open inter-family conversations to help ensure that money is managed thoughtfully and effectively, as well as cooperatively. It also means staying aware of your own financial plan when it comes to the increasing costs of medical care for your parents and college for your children.
Generous Boomers - Tenuous Retirement
Exactly how to teach children about money is a dilemma for many parents, according to the Ameriprise Financial New Retirement MindscapeSM study: 52% of those surveyed said it was the advice they needed most. In fact, some baby boomers are concerned about how the support they give their grown children may impact their own golden years, according to Nathan Dungan, president and founder of Share Save Spend, an organization that helps people of all ages develop and maintain healthy financial habits. Although they have these concerns, only 29% of boomers think helping their adult children is slowing down their retirement savings - a key finding of the Ameriprise Financial Money Across GenerationsSM study. One reason they don't see the impact on their retirement savings may be that they are tapping into "day-to-day" spending money and not dipping into retirement accounts to fund their children's needs. But, could some of that money be used to save toward retirement savings?
Money Talks
Discussing finances can be complicated because each generation thinks about money and the need to talk about it with other family members in ways that have been shaped by their upbringing and societal norms. An 86-year-old patriarch, for example, probably has a much different view of debt than do boomers or their children. He may question why his 28-year-old grandson uses a credit card to buy new clothes even if he's already deeply in debt. Although talking about money may be a sensitive subject, good things happen when families discuss money. It's important to approach the conversation in an open, non judgmental way. While finances are a taboo subject for many reasons, "harmony can be realised through understanding and communication," Dungan says. In some cases, families may find it helpful to include a neutral third party, such as a financial advisor, to act as a facilitator.
Key points about families and finances:
1. Members of the sandwich generation cope with balancing their own needs with the needs of their parents and children.
2. Generosity to family is only natural but you need to plan for it.
3. Have conversations about money with family, because open dialogue about money benefits everyone.
4. It may be helpful to include a neutral third party, to act as a facilitator.
Take Ruth, for example, a 59-year-old widow who supports her two adult sons. Ruth's financial advisor told her, "Let's deal with this now, or you're going to be making some really tough choices in five or 10 years," Dungan recalls. "You need to tell your children you can't be their sole source of financial support. The best way to avoid these complicated situations is to do what may seem uncomfortable: Talk honestly about money. According to Dungan, no matter how you do it, what really matters is that you start the conversation and keep it going. "The money thing, from my perspective, is as much, if not more, about communication as it is about money," he says.
Boomerang Children
According to Pew Research study in 2021 47% of 18-29 are still living with their parents whilst usafacts.org states that 16.9% of young adults aged 25-34 live with at least one parent. While many people in this age group may still be in education and have not yet moved out, others have returned home believing they can't afford to live independently because of high housing costs and student debts.
Tips to help you transition your grown up children into financial independence:
1. Have an agreement that spells out the living arrangements and household responsibilities.
2. Be clear about what financial responsibilities children will have when they move back home (e.g., paying rent or a portion of utility expenses).
3. Require that children make specific progress toward paying down debt and adding to their savings.
4. Agree on a departure date.
Making a Better Sandwich
Your financial advisor can help you determine what financial needs you will have based on your own goals and unique family situation. For instance, you could consider investing in a 529 plan for your children's or grandchildren's college expenses, or purchasing long-term care insurance for your parents.
You may also need to think about other health-care expenses and estate planning issues with your parents.
Your advisor can help guide you and your family through these issues and decisions while helping you keep your own retirement planning on the right track.
Article Source: https://EzineArticles.com/expert/Joshua_Ely/256297
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