1. Put your own finances first
Your parents took care of you, so you may be tempted to take care of their every need. And when it comes to your kids, your first instinct, understandably, may be to put their needs ahead of yours.
While the impulse to support your loved ones is valid, it's important to prioritize your own savings. One way to think about it is, if you are the financial foundation for your family, weakening it is bad for everyone in the long run.
2. Talk to your parents about their financial picture
Honestly and openly discussing money and mortality with your parents can be hard. While this may be a conversation you’ve been avoiding, the best time to have it is before you are in a situation where you are caring for an ailing parent.
The more you understand your parents' financial plan and assets, the better prepared you’ll be to foresee shortfalls and assess how to help. Ask your parents about their living expenses and their financial resources before something happens.
If sorting out a financial strategy feels too overwhelming or complicated, you may want to consider meeting with a Merrill Edge Financial Solutions Advisor to discuss your situation.
3. Consider long-term care insurance
Many Sandwich Generation members are dealing with steep out-of-pocket costs of long-term care. The cost of in-home or nursing facility care can exhaust your parents’ assets very quickly. Neither traditional insurance nor Medicare will cover that care, so it's a good idea to look into long-term care insurance. Merrill Edge provides a wealth of information on the subject that’s clear to understand for both you and your parents.
Keep in mind that it costs less to buy long-term care insurance when you’re younger since premiums increase as you age. The time to plan for this is before a crisis starts and when everyone is still in good health.
4. Take the house into consideration
Your parents’ biggest asset may very well be their house. As they age, they may decide to sell it for financial or lifestyle reasons. Be sure you incorporate the value of their home into your planning, especially if they can no longer live independently.
5. Research Medicaid options
Medicaid might cover medical costs for those with very limited financial resources. Make sure to explore the eligibility requirements of those benefits and the role they might play in your parents’ plans. This may be your parents’ best route for care as they age, as it won’t deplete your or other family members’ resources.
6. For college, consider a 529
While your parents may be your most pressing concern, you’re likely also focused on paying for your child’s college education. Understand your college savings options and what might work best for you and your family. You might consider investing in a tax-advantaged Section 529 college savings plan. 529 college savings plans, offered through Merrill Edge®, are flexible, tax-advantaged accounts that allow you to make high contributions to help you pay for college expenses. You won't be taxed on your funds as they grow—and you pay no federal (and often state) taxes on withdrawals used for qualified higher education expenses. To learn more about Section 529 college savings plans, check out resources provided on Merrill Edge.
Later, when it's time to apply for college, help your child seek out scholarships, grants and loans. Again, don’t neglect your own finances—loans for college are available; loans for your retirement years are not.
7. How to deal with wedding bells and boomerangs
It’s understandable to envision college as the final stage in financial support for your children. However, given the unemployment rate among Millennials, that may not hold true for your family. More young adults (often called the Boomerang Generation) are moving back in with Mom and Dad to cut costs while finding full-time employment. In addition, it’s not unusual for parents to help their children defray the rising costs of weddings.
Be prepared to ask your children to contribute to household expenses like food, mortgage payments and utilities. Even a part-time job can help mitigate the cost of having your kids move back home. Be clear about your expectations regarding their responsibilities. When it comes to weddings, work with your children to set reasonable expectations around what you can contribute, and help them find ways to cut costs.
Being a member of the Sandwich Generation can sometimes feel like a difficult and lonely balancing act, involving a great many responsibilities and stresses. While it may seem difficult, you’re not alone. Talk to your friends about their experiences and look for support online. Above all, make sure your financial house is in order and plan for your own retirement—that will help you build a strong foundation in order to pursue all your financial goals.
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