Susan and Derrick Friedman have reached their early 90s
just as their four children have entered their retirement
years. The Friedman siblings are part of the Sandwich
Generation; Baby Boomers who may find themselves
caught in a new financial paradox: how to retire while
caring for both elderly parents and young adult kids—
Millennials who still need financial assistance.
As life spans increase, so do the number of Baby
Boomers who fit this description. A 2013 Pew Foundation
survey found that half of the Baby Boomers have aging
parents and are raising a young child or supporting a
young adult. And at least 15% provide financial support
for both their parents and children. This new trend
threatens to squeeze Boomers’ finances and put their
retirement nest egg at risk—unless they learn how to
navigate the looming pitfalls.
That’s what the Friedman children did—with some
assistance. They spoke to a geriatric consultant and
gathered valuable tips about how they could avoid moving
their parents into a costly retirement facility. Here’s five of
the most important lessons for Boomers:
1. Protect your retirement assets—
put yourself first
Don’t sacrifice your own financial health by raiding your
retirement savings to cover college tuition or your parents’
long-term care. Consider student loans and ways to
stretch parents’ assets. In the case of the Friedmans, the
consultant explained that as income from the sale of the
family home dwindled, they might qualify at some point
for subsidized care giving, critical to living on their own.
2 Anticipate your financial needs
Plan ahead for the possibility that kids may move back
home and aging parents will require financial help,
increasing your monthly reserve.
3 Consider long-term care insurance for
your parents and you
Price policies and learn what’s covered—it may help
defray some of the enormous expense of nursing homes.
(Insurance policies contain exclusions, limitations,
reductions of benefits, and terms for keeping them in
force. Your financial professional can provide you with
costs and complete details.)
4 Research tax breaks for caregivers
If your parents live with you for half the year, you may
be able to pay for caregivers and other expenses by
claiming the dependent-care credit on your tax return or
contributing to an employer’s dependent-care flexible
spending account.
5 Set clear financial limits when kids move back
Encourage them to work or pay some rent.
If they hadn’t reached out for advice, the Friedmans’
children wouldn’t have considered applying for Veterans
Administration benefits. “Now they’re more willing to
spend on what they need—drivers and caregivers,” says
Dana Friedman Roberts. “And that’s reduced the help they
need from us.”
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This is not an actual client or client experience. This is a hypothetical example and is not representative of any specific situation. Your individual circumstances and results may vary.
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