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Sandwich Generation Support: Part 2, Finances

Suzanne Shaffer

Over the last five years some major medical issues for both myself and my husband have precipitated conversations about our care as we are now in our senior years with health concerns that require monitoring. It seems like yesterday that I was dealing with these same decisions regarding my elder family members. 

My own children will soon be a part of the sandwich generation — raising children of their own while caring for their aging parents. Will they be prepared financially? Have we done all we can to make it easy on them? These are questions many families like us need to answer before they are faced with the responsibility and privilege of caring for the aging parents.

I was blessed because my father and my great aunt made financial preparations for their long-term care. Caring for them put minimal financial strain on our family, but so many other families are faced with shouldering all the expenses related to caring for their own children and their parents’ aging.

According to the 2019 Kids and Money Survey by T. Rowe Price, 74% of respondents who were helping care for their parents or elder family members said they were receiving no financial help from them. Caring for aging family members is expensive. Nearly one-third of caregivers spend $3,000 or more a month on elder care. The vast majority, over 75%, said they were using money from savings, their own retirement funds and even college savings to help care for their parents. 

The National Alliance for Caregiving and Caring Across Generations found that one in five sandwich caregivers reported feeling financial strain as a result of being a caregiver. 

If you have a parent who is approaching the later years in life, it’s important to prepare now. I learned some valuable lessons when caring for my father and great aunt. It is my hope my experience will help you navigate the same waters.

Here are four pieces of advice!

1. Have an open conversation with your aging family members and your siblings.

This is a difficult conversation to have because it will require you to discuss your finances and their finances. It can be a touchy subject for many families, but it needs to be addressed.

It is important for you to determine what your parents’ expectations are for their care. You will also need to decide if there are funds available for their care and if not, will the expenses be shared equally among the siblings.

The next topic to discuss is their expected living arrangements. Are there health concerns that may require a senior home or other care facility, or do they expect to live with family and if so, is it feasible? Who in your family will become the primary caregiver? 

We determined my father would build an apartment in our back yard which would allow us to participate in his care and give him the opportunity to help us with our children. My great aunt moved into our home when she was exhibiting signs of Alzheimer’s disease and required more focused attention.

Keep in mind that it may not be easy for your parents or even your siblings to have this conversation. Your parents may be hesitant to admit they need help, and your siblings may also feel differently than you do about care. With everyone involved, however, you can develop a plan as a group for handling the financial and non-financial aspects of caregiving.

2. Be realistic about the costs and available funds.

According to the U.S. Department of Health and Human Services, the average monthly cost of care for a semi-private room in a nursing home is $6,844. The average monthly cost of care jumps to $7,698 for a private room. Researching the cost of care for nursing facilities in your area can help minimize sticker shock if you anticipate paying for care out of pocket.

Discuss with your parents if they have a pension fund, their social security and Medicare benefits along with supplemental insurance, and if they have a 401k for retirement. Once you have all the records and have discussed their estimated income from these accounts, you can determine how much you will need to contribute if medical care becomes essential above these covered amounts.  

If your parents will be living with you, explore the costs for in-home care and assistance and determine how much, if any, will be covered by Medicare and supplemental insurance. 

If you're in the sandwich generation, your budget may need to be adjusted to accommodate new costs associated with caregiving or even paying for college. That could mean reducing certain expenses so you can continue to save for retirement at the same pace or even getting a second job to put toward those caregiving expenses.

3. Explore other sources of funding.

If you have the time and it’s financially possible, consider some other sources for funding the care of your parents. These can ease some of the pressure of being sandwiched and give your parents peace of mind knowing they have provided the funds for their care.

Long-term care insurance is something to consider. It can pay for the nursing home care that isn’t covered by Medicare. Medicaid will cover the care, but your parents will be required to spend down their assets first and will have less control over where they end up. Ideally you investigate long-term care insurance sooner rather than later because premiums are based on health and age.

Another option is a chronic illness rider on a life insurance policy. Some policies may have a chronic illness rider so you can accelerate the death benefit and use the money to pay for your parents’ care. A chronic illness rider is a feature available on life insurance that funds long-term care costs when you have a permanent or terminal illness. Some chronic illness riders specify the conditions or diseases that are eligible for benefits, but many do not. 

4. Try to keep your emotions in check.

Emotions can be a significant driver of financial decision-making. Your desire to help both your parents and your children while helping yourself can cause problems. Even though you may have the best intentions in wanting to take care of your aging family members, you should consider how it will impact you and your family.

If you are emotionally committed to paying for your parents’ care and your child’s college education, you should be sure it is financially feasible. That will require you to take stock of your existing resources and available assets. It may require some adjustment on your child’s choice of college or a stronger commitment to apply for scholarships. Student loans may enter the picture and you could find yourself considering private loans to pay for college. Just be sure your emotions aren’t causing you to sacrifice your own future and causing you and your family financial upheaval.

The hardest part of being in the sandwich generation is juggling the emotional aspects of it all with the financial stress involved. Do your best to balance what you give emotionally and financially. Don’t forget to consider your own needs and look toward the future. At some point, your own children will be where you are now, and watching you handle this will help them when the time comes for them to do it for you.

Suzanne Shaffer counsels students and families through her blog, Parenting for College. Her advice has been featured in print and online on Huffington Post, Yahoo Finance, U.S. News College, TeenLife, Smart College Visit, Road2College and more.
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