How to Financially Care For You, Your Kids & Your ParentsCollege Planning Investing Retirement Funding Raising Children Financial Wellness
Supporting parents and their complicated financial lives is a big focus of Overman Capital's practice. As a parent, you have one of the most critical jobs in the world - raising and encouraging the next generation. Some parents, however, find that they’re sandwiched between raising their kids and caring for older loved ones. Aptly named the “sandwich generation,” those in their 40s and 50s may be feeling the pressure of being stuck in the middle. In fact, a recent study suggests almost half (47 percent) of adults are a part of the sandwich generation.1
If you're a loving parent and an adult child caring for parents of your own, how do you strike a balance between your financial wellbeing, your child's needs, and your parents?
Understanding Your Situation
You may feel compelled to provide care for your aging parents in addition to raising children, meaning you don't mind the added responsibility. But stretching yourself financially between saving for college, preparing for your retirement, and covering your parents' costs can be a challenging situation to find yourself in. And depending on how much care your kids or parents require, your income stream could be affected.
That's why protecting your financial standings when caring for loved ones should remain top of mind. Finding that balance is, of course, easier said than done. Here are a few suggestions from Rob and Jay to ease the financial toll of caring for elderly parents while being a parent of your own.
Tip #1: Build Your Support Network
Sometimes people feel like they need to shoulder all of the responsibility in caring for elderly parents. You may be the oldest sibling in your family, considered the most responsible, or simply live the closest to Mom and Dad. But if you find that the caretaking is becoming too much for one person, it may be time to have a transparent and honest conversation with your siblings or other family members. They may not know just how much added responsibility you've taken on, and they may be just as eager to help.
Family members aside, it can be beneficial to gather a team of financial professionals as well. Overman Capital, for example, can help keep your financial priorities top of mind while also developing a game plan for managing your caretaker responsibilities. Other professionals you may want to engage with include an accountant, estate planning attorney, insurance agent, and college planning professional.
Tip #2: Keep Your Savings Goals in Mind
Remember, you can not help others financially or otherwise if your financial standings are in jeopardy. Trying to put a kid through college while caring for aging parents can drain your savings quickly if you aren't careful. That's why making your own financial goals a priority isn't easy but essential.
Staying focused on your long-term financial goals (like retirement) can be thought of as a way to protect your children. Emptying your retirement accounts early, or neglecting to save enough for retirement, could leave you in a lousy spot later in life. In turn, your children may find themselves providing for you financially while they're raising kids of their own. You can see how this may create a snowball effect. Remembering to prioritize your long-term goals now can help set you, your children, and your grandchildren up for a less stressful financial future.
Tip #3: Create Boundaries For Your Children
If your kids are college-age or older, you may be able to set financial limitations with them. Establishing conditions won't be easy, but it may be necessary in certain circumstances. If they don't already work, encourage them to find a part-time job. And if they're already earning an income, help your kids develop a budget and become as self-sufficient as possible. You may even find that when presented with the opportunity, your kids can rise to the challenge and learn good money habits from being less financially dependent on their parents.
If your kids are younger, start working with them to understand the importance of saving versus spending (Check out the Million Bazillion podcast if you need some ideas). That way, when they're old enough to start earning money of their own, they'll be well-prepared to work toward financial independence from you.
Tip #4: Consider Investing in a Long-Term Care Policy
A long-term care insurance policy or hybrid life insurance policy can cover some expenses not typically covered by health insurance. These policies could include assistance with activities of daily living (ADLs) such as bathing, dressing, and eating. Care may be provided wherever your parents live - at home, in a nursing facility, or in adult daycare.
Typically, individuals purchase a long-term care policy in their 40's to 50s, as a policy can't be obtained once a person has been diagnosed with certain debilitating conditions or diseases. Depending on your parents' health, you may still have time to purchase a policy. If not, you may want to look into obtaining a policy for you and your spouse if you're concerned about your own future care needs. Rob and Jay are happy to share their perspective on long-term care insurance and it's alternatives if you're seriously considering a purchase.
Protecting yourself, your parents, and your kids requires careful strategizing, discipline, and planning. It's a balancing act, but it's one you don't have to perform alone. Overman Capital can help steer you in the right direction while keeping your financial goals a priority.
Give us a call (252) 635-6666, connect with us online, or stop by the office in wonderful downtown New Bern.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.