The Money Sandwich: Caught Between the Needs of Children and Aging Parents

Reviewed Jun 16, 2016

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Summary

  • Consult with a financial advisor.
  • Ask your employer about special benefits or assistance.
  • Make sure your insurance coverage is adequate.

“The sandwich generation.” The phrase is becoming more common as thousands of couples join its ranks, finding themselves caring for their own children and their aging parents at the same time. Not only does this take an emotional toll on a family, but a financial one as well. The rising costs of child care, higher education, and health care can put a crimp in anyone’s wallet. How can one save for retirement as well? There really is no easy way, but you can take steps to ensure your own future financial well-being while still meeting the needs of your kids and parent(s).

Financial planning

Authors Stephen Pollan and Mark Levine recommend hiring financial advisors—one for you and one for your parent. Financial advisors have knowledge of the current tax laws and can offer a variety of options that will best fit your needs. By bringing an expert third party into the situation, you and your parent benefit by having a similar understanding, and your parent is able to maintain a sense of control.

You also might consider hiring an attorney who specializes in elder care issues to help organize your parent’s affairs, including future care options, a will, and a living will. (A living will allows your parent to state whether or not he would want to remain alive if his life were dependent on machines, such as a respirator.)

Health care

The median cost of nursing home care is $250 per day for a private room and $220 for a semi-private room, according to Genworth's 2015 Cost of Care Survey. The average hourly rate for a home health aide can range from $9 to $40. Costs in many cities are significantly higher. One option to offset this cost is long-term care insurance. Investigate your options. Compare several different plans in terms of annual premiums and co-payment amounts. Are pre-existing conditions covered? Can the company cancel the policy or is renewal guaranteed? Research to make sure your parent has the policy that most fits her needs.

Medicare, which covers short-term nursing home stays, and Medicaid, which covers long-term stays, are government programs that can be beneficial for those who qualify. Be aware of the Medicaid rules for your state, since each state can vary its coverage and rules.

Another option you might consider is having your parent move in with you. This arrangement, however, needs to be considered very carefully before entering into it. While there are some financial advantages, there are potential expenses as well, including food and possible home remodeling. There are many factors that influence this decision, only one of which is financial.

Child care

The cost for quality day care can range from more than $5,000 to $22,000 per year, depending on where you live.  An increasing number of employers are offering some type of assistance with child care issues. Check with your employee assistance program to learn more about these benefits.

Additionally, you can now deduct some of your child care costs on your federal income taxes with Form 2441. Finally, examine alternative types of child care, such as au pairs, nannies, and home-based day care but, of course, quality of care should always be a chief consideration.

College

Many parents dream of seeing their child graduate from a prestigious Ivy League school such as Harvard or Yale, but the reality, financial and otherwise, generally is quite different. First, don’t assume that your child is college-bound. Not everyone benefits from a college education and there are many well-paying and respectable jobs that don’t require a college degree. Second, a local school might be more realistic. Not only might the tuition be cheaper, but living at home for the first year or two can ease the financial burden as well. Community colleges are a great place for many students to begin; they can later transfer to a larger school with a more prestigious degree.

Other options to help pay for school include work/study programs, military programs including ROTC, National Guard and regular duty, scholarships, and student loans. Finally, there is no rule that says you are solely responsible for your child’s education. She might be more appreciative of her degree if she had a hand in paying for it.

Don’t forget about you

In your planning for your children’s and parent’s futures, don’t forget about your own. Make sure your own insurance coverage is adequate, including health, life, and disability insurance, and do what you can to secure your employment, such as building a marketable skill set. A financial advisor is integral in developing a strategy for your economic security. You have your own retirement to think about some day. 

Source: BabyCenter, Inc., www.babycenter.com; National Academy of Elder Law Attorneys, Inc., www.naela.com; National Association of Personal Financial Advisors, www.napfa.org; "Dual-Earner Couples in the 'Sandwiched Generation.'" A research project funded by the Alfred P. Sloan Foundation. Portland State University Institute on Aging, 2000; Senior Law Home Page www.seniorlaw.com; Genworth, www.genworth.com/dam/Americas/US/PDFs/Consumer/corporate/130568_040115_gnw.pdf

Summary

  • Consult with a financial advisor.
  • Ask your employer about special benefits or assistance.
  • Make sure your insurance coverage is adequate.

“The sandwich generation.” The phrase is becoming more common as thousands of couples join its ranks, finding themselves caring for their own children and their aging parents at the same time. Not only does this take an emotional toll on a family, but a financial one as well. The rising costs of child care, higher education, and health care can put a crimp in anyone’s wallet. How can one save for retirement as well? There really is no easy way, but you can take steps to ensure your own future financial well-being while still meeting the needs of your kids and parent(s).

Financial planning

Authors Stephen Pollan and Mark Levine recommend hiring financial advisors—one for you and one for your parent. Financial advisors have knowledge of the current tax laws and can offer a variety of options that will best fit your needs. By bringing an expert third party into the situation, you and your parent benefit by having a similar understanding, and your parent is able to maintain a sense of control.

You also might consider hiring an attorney who specializes in elder care issues to help organize your parent’s affairs, including future care options, a will, and a living will. (A living will allows your parent to state whether or not he would want to remain alive if his life were dependent on machines, such as a respirator.)

Health care

The median cost of nursing home care is $250 per day for a private room and $220 for a semi-private room, according to Genworth's 2015 Cost of Care Survey. The average hourly rate for a home health aide can range from $9 to $40. Costs in many cities are significantly higher. One option to offset this cost is long-term care insurance. Investigate your options. Compare several different plans in terms of annual premiums and co-payment amounts. Are pre-existing conditions covered? Can the company cancel the policy or is renewal guaranteed? Research to make sure your parent has the policy that most fits her needs.

Medicare, which covers short-term nursing home stays, and Medicaid, which covers long-term stays, are government programs that can be beneficial for those who qualify. Be aware of the Medicaid rules for your state, since each state can vary its coverage and rules.

Another option you might consider is having your parent move in with you. This arrangement, however, needs to be considered very carefully before entering into it. While there are some financial advantages, there are potential expenses as well, including food and possible home remodeling. There are many factors that influence this decision, only one of which is financial.

Child care

The cost for quality day care can range from more than $5,000 to $22,000 per year, depending on where you live.  An increasing number of employers are offering some type of assistance with child care issues. Check with your employee assistance program to learn more about these benefits.

Additionally, you can now deduct some of your child care costs on your federal income taxes with Form 2441. Finally, examine alternative types of child care, such as au pairs, nannies, and home-based day care but, of course, quality of care should always be a chief consideration.

College

Many parents dream of seeing their child graduate from a prestigious Ivy League school such as Harvard or Yale, but the reality, financial and otherwise, generally is quite different. First, don’t assume that your child is college-bound. Not everyone benefits from a college education and there are many well-paying and respectable jobs that don’t require a college degree. Second, a local school might be more realistic. Not only might the tuition be cheaper, but living at home for the first year or two can ease the financial burden as well. Community colleges are a great place for many students to begin; they can later transfer to a larger school with a more prestigious degree.

Other options to help pay for school include work/study programs, military programs including ROTC, National Guard and regular duty, scholarships, and student loans. Finally, there is no rule that says you are solely responsible for your child’s education. She might be more appreciative of her degree if she had a hand in paying for it.

Don’t forget about you

In your planning for your children’s and parent’s futures, don’t forget about your own. Make sure your own insurance coverage is adequate, including health, life, and disability insurance, and do what you can to secure your employment, such as building a marketable skill set. A financial advisor is integral in developing a strategy for your economic security. You have your own retirement to think about some day. 

Source: BabyCenter, Inc., www.babycenter.com; National Academy of Elder Law Attorneys, Inc., www.naela.com; National Association of Personal Financial Advisors, www.napfa.org; "Dual-Earner Couples in the 'Sandwiched Generation.'" A research project funded by the Alfred P. Sloan Foundation. Portland State University Institute on Aging, 2000; Senior Law Home Page www.seniorlaw.com; Genworth, www.genworth.com/dam/Americas/US/PDFs/Consumer/corporate/130568_040115_gnw.pdf

Summary

  • Consult with a financial advisor.
  • Ask your employer about special benefits or assistance.
  • Make sure your insurance coverage is adequate.

“The sandwich generation.” The phrase is becoming more common as thousands of couples join its ranks, finding themselves caring for their own children and their aging parents at the same time. Not only does this take an emotional toll on a family, but a financial one as well. The rising costs of child care, higher education, and health care can put a crimp in anyone’s wallet. How can one save for retirement as well? There really is no easy way, but you can take steps to ensure your own future financial well-being while still meeting the needs of your kids and parent(s).

Financial planning

Authors Stephen Pollan and Mark Levine recommend hiring financial advisors—one for you and one for your parent. Financial advisors have knowledge of the current tax laws and can offer a variety of options that will best fit your needs. By bringing an expert third party into the situation, you and your parent benefit by having a similar understanding, and your parent is able to maintain a sense of control.

You also might consider hiring an attorney who specializes in elder care issues to help organize your parent’s affairs, including future care options, a will, and a living will. (A living will allows your parent to state whether or not he would want to remain alive if his life were dependent on machines, such as a respirator.)

Health care

The median cost of nursing home care is $250 per day for a private room and $220 for a semi-private room, according to Genworth's 2015 Cost of Care Survey. The average hourly rate for a home health aide can range from $9 to $40. Costs in many cities are significantly higher. One option to offset this cost is long-term care insurance. Investigate your options. Compare several different plans in terms of annual premiums and co-payment amounts. Are pre-existing conditions covered? Can the company cancel the policy or is renewal guaranteed? Research to make sure your parent has the policy that most fits her needs.

Medicare, which covers short-term nursing home stays, and Medicaid, which covers long-term stays, are government programs that can be beneficial for those who qualify. Be aware of the Medicaid rules for your state, since each state can vary its coverage and rules.

Another option you might consider is having your parent move in with you. This arrangement, however, needs to be considered very carefully before entering into it. While there are some financial advantages, there are potential expenses as well, including food and possible home remodeling. There are many factors that influence this decision, only one of which is financial.

Child care

The cost for quality day care can range from more than $5,000 to $22,000 per year, depending on where you live.  An increasing number of employers are offering some type of assistance with child care issues. Check with your employee assistance program to learn more about these benefits.

Additionally, you can now deduct some of your child care costs on your federal income taxes with Form 2441. Finally, examine alternative types of child care, such as au pairs, nannies, and home-based day care but, of course, quality of care should always be a chief consideration.

College

Many parents dream of seeing their child graduate from a prestigious Ivy League school such as Harvard or Yale, but the reality, financial and otherwise, generally is quite different. First, don’t assume that your child is college-bound. Not everyone benefits from a college education and there are many well-paying and respectable jobs that don’t require a college degree. Second, a local school might be more realistic. Not only might the tuition be cheaper, but living at home for the first year or two can ease the financial burden as well. Community colleges are a great place for many students to begin; they can later transfer to a larger school with a more prestigious degree.

Other options to help pay for school include work/study programs, military programs including ROTC, National Guard and regular duty, scholarships, and student loans. Finally, there is no rule that says you are solely responsible for your child’s education. She might be more appreciative of her degree if she had a hand in paying for it.

Don’t forget about you

In your planning for your children’s and parent’s futures, don’t forget about your own. Make sure your own insurance coverage is adequate, including health, life, and disability insurance, and do what you can to secure your employment, such as building a marketable skill set. A financial advisor is integral in developing a strategy for your economic security. You have your own retirement to think about some day. 

Source: BabyCenter, Inc., www.babycenter.com; National Academy of Elder Law Attorneys, Inc., www.naela.com; National Association of Personal Financial Advisors, www.napfa.org; "Dual-Earner Couples in the 'Sandwiched Generation.'" A research project funded by the Alfred P. Sloan Foundation. Portland State University Institute on Aging, 2000; Senior Law Home Page www.seniorlaw.com; Genworth, www.genworth.com/dam/Americas/US/PDFs/Consumer/corporate/130568_040115_gnw.pdf

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