Kids, Parents & Money

Members of what is being called the "sandwich generation" are coping with balancing their own needs with the needs and expectations of family. These individuals are often "sandwiched" between the needs of their parents, who may require assistance with daily living tasks or medical care, and the needs of their children, who may require financial or emotional support. 

Within the next decade, the population over age 65 will continue to grow. Increasing life expectancies also means that more people are likely to have chronic health problems and family involvement in their care. 

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 education for your children.

Generous Boomers - Severely impacts our Retirement

Exactly how to teach children about money is a dilemma for many parents.  In fact, some baby boomers are concerned about how the support they give their grown children may impact their own golden years. Although they have these concerns, boomers think helping their adult children is slowing down their retirement savings.  One reason boomers 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?

 

Lets Talk Money

Discussing finances can be complicated. 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, for example, probably has a much different view of debt than do their children or their grandchildren. 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," In some cases, families may find it helpful to include a neutral third party, 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 Sarah, for example, a 46-year-old divorcee who supports her two adult sons. Sarah'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," 

"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. 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 the money itself," 

Boomerang Children

While many people in this age group 18-30 may still be in school and have not yet moved out, others have returned home believing they can't afford to live independently because of high housing costs, credit card debts and student loans.

Tips to help you transition your adult child 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 plan for the future.

Making a Better Sandwich

Femvestorsglobal can help you determine what financial needs you will have based on your own goals and unique family situation. For instance, you could consider an education fund, 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. We help guide you and your family through these issues and decisions while helping you keep your own retirement planning on the right track.