Are you one of the 'sandwich generation'?
Fri Nov. 22nd 2019
Managing the expense and stress
Once upon a time, baby boomers were the privileged generation, growing up in the welfare state. But as we live longer and the economy gets tougher, they're caught in the middle, looking after aging (and sometimes impoverished parents) as well as propping up the younger generation.
Most middle-aged Kiwis – 40 to 60-year-olds – have one or more parents still alive and are raising their own kids. Some (about 15%) are supporting both financially, and with care.
Since 2005, just under a quarter of Kiwi boomers have supported aging parents in poverty. And with the younger generation facing mounting financial struggles, it's getting even harder to care for everyone. Young people live at home longer, take well into their adulthood to embark on a career, and sometimes don't establish their own living arrangements until they get married or settle with a permanent partner.
If you're nodding away saying "Yes, that's me!", welcome to the ultimate sandwich. But don't despair – there are ways to lighten the load and cope with being the meat in your family sandwich!
However busy your schedule, make time to assess your financial situation. Where is there wiggle room for saving? Where do you keep your important documents safe? Perhaps look for an app to get your multiple accounts and plastic cards sorted. Maybe combine some of them so your finances are easier to manage. If you can, get rid of credit card debt and cut up some of those cards to resist the urge to carry on spending.
Use the same techniques for organising your elderly parents' finances too. That way, when they pass, you're free to grieve and celebrate their lives rather than worry about their estate.
Have that uncomfortable discussion
It might be uncomfortable but ask your parents how they'd like to be cared for if/when they need it, and what they plan to do with their assets when they pass. It's not just about who gets what, but also about family history and choosing the right executor to see their wills are executed correctly.
Help your parents to make their wills, set up an Enduring Power of Attorney so you and your family still have the right to make important decisions about their health care or whats happens to their assets should your parents lose their mental capacity and are not able to make these decisions for themselves. Establish a care plan which might include directives such as a DNR (do not resuscitate) order. They'll have peace of mind and you will too.
Explore care options
Most people need care when they get past a certain age. Retirement home living can be expensive and if your elderly parents are reluctant to that idea, there are other, cheaper options. Home help, Meals on Wheels, and other in-home services could be the answer. Many are subsidised by the government or run by volunteers – find out what's available in your area and what suits your parents.
Don't forget other family members – they may be happy to help with care and just need to be asked. Set up a roster so no-one is overburdened.
Saving for your retirement is as crucial as car or mortgage repayments. Keep in mind although your parents might need your care and support now, they won't forever. The same goes for your children – saving for your own retirement means you believe in your kids' future too.
Plan ahead for education
You're in a sandwich, remember? Your kids also need your support and they get exponentially more expensive as they grow up. Tertiary education is no longer on the free list, so putting aside money in a 'uni fund' is a must. When it comes to crunch time, if your children decide uni isn't for them, the money you've saved won't go to waste. Use it to put a deposit on a house, invest in a business or if you're lucky, you could spend it on yourself.
Get some good advice
You're probably not a financial wizard (most of us aren't), so when you're wading through all the ins and outs of income and bills, debt and savings, sometimes you need to call in expert help. A financial adviser will help you sort your accounts, clarify issues and priorities so you can make some sound decisions about the future. You could also get advice on how to get your parents sorted and your children's future secured.
Don't struggle on alone
You might be one of the sandwich generation, but it doesn't have to be all stress and struggle. Take charge of your finances, help your parents sort out theirs, and be ready with savings to launch your children into the world. Most importantly, don't try and do it alone. Include family members in your care roster, and when things do get too complicated, talk to an expert financial adviser like Cave Financial.
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