Imagine reaching retirement age only to find you have little to nothing left because you gave it all to others. Proper financial planning and goal setting will help ensure you can retire on your terms. It’s easy to allow outside factors to determine your path, but it’s important to plan for yourself primarily. Read on to discover how you can protect your retirement if you’re a part of the sandwich generation.
Prioritize your retirement savings and needs
First and foremost, you must prioritize your savings and needs. It’s important to prepare yourself before you can help others because you cannot pour from an empty cup. Your cup must be full enough for your savings and needs in order to help your family.
Enough, in this case, can mean financial means, energy, time, and commitment. Families in the sandwich generation have to split their caretaking time between their aging parents and their growing children. Both will need the “sandwiched” folks at one time or another. Therefore, if you’re not willing to set boundaries, you may find yourself in a bit of a bind in the near future.
Establish short and long-term goals
Deciding what’s possible and probable is a great place to start when setting goals. Filtering your goals into short-term and long-term time horizons is imperative to see what is worth addressing now and in the future. Short-term goals, meaning one year or less, may be the best place to start. Making sure you set goals that are SMART (Specific, Measurable, Attainable, Realistic, and Time-Bound) is crucial for achieving your objectives.
Everyone in the family should be involved in some of the goal-setting, but for the sandwich generation, you can set your own, separate goals. Long-term goals, meaning a year or more down the road, are just as important and need just as much thought. Your long-term goals will need time and commitment, and will potentially be the most difficult to obtain if the commitment is not there. All members of the family need to be on the same page about goals to ensure all goals are met.
Help your parents create a retirement income plan
If you have siblings, now is the time to get everyone involved in helping your parents prepare for retirement. If they are like many pre-retirees, they may not have properly prepared for retirement. While they may have good intentions to someday make a plan, they may have no idea what retirement is going to look like or where to start.
It’s important to note that your parents may not be able to live off the benefits of Social Security alone. Asking your parents about their income during retirement is vital to helping set your own goals. Setting a budget together will help you see if and where there are gaps. Bringing up topics such as insurance, emergency funds, health care, and housing can help you identify the needs that require attention.
Review long-term care options for you and your parents
Did you know the average U.S. semi-private nursing home room costs $6,844 per month? Affording any long-term care needs can be costly. That’s why it’s important to have a plan in place in case you or your parents need some form of long-term care.
Assuming your parents are in great health and have the money for these services, then this may not be a concern. However, if they don’t have the means, then looking at alternative options is probably what you need. Sure, they may have Medicare, but often it doesn’t cover a lot of long-term care expenses. Additionally, do you have the costs to hire an in-home CNA or LPN? Something else to add to your budget and to ponder during the planning process.
Consider contributing to a college savings account
To prepare for your children’s college, ask your financial planner about 529 plans or qualified tuition plans. You can choose between the two types, or rather what your state offers, to start saving early for your child’s education costs.
Of course, the earlier you start, the longer your investment has to grow. Depending on which plan you chose, add the contributing amount into your budget and forget about it. Make it an automatic deposit into the account for your child(ren) while also budgeting for retirement options for yourself. Also, it’s imperative to understand the fees associated and the use of funds to make sure you are maximizing what your saved money can do for your children, and in the long-run, you. Another option would be to ask your family to help contribute to a 529 plan or even a simple savings account. Instead of allowing family members to send gifts, consider asking for a donation to the plan.
Generate and review estate planning documents
To understand what it means to die without a will or living will, research your state’s probate laws. Check out local university extension offices for help finding these documents or even ask a local government agency about where to look.
Even if your family has good intentions, when your parents pass away, there will likely be some friction and possible hard feelings if there is no will in place. Again, a hard conversation is necessary. If there is no life insurance at this point, consider purchasing a policy. If not, you run the risk of supporting parents who, when they pass, will leave you with debt on their behalf. Hire a lawyer and a financial planner to assist you in creating and supplying the appropriate documentation.
Take inventory of your assets
It’s wise to have made an inventory of your assets. This way you can keep track of your net worth and know what you’re working with. You may want to start by listing all of your accounts and each balance. Include assets such as the equity in your home, your retirement accounts, investment properties, and other tangible assets.
Understanding your net worth can help you make the appropriate plan for your retirement and supporting your loved ones. If you have any doubt that the assets you have are not conducive to your plans, talk with your financial planner so you can make the appropriate adjustments.
Find professional help
Financial planners can help with the financial, emotional, and physical strain that the sandwich generation may experience. Surprisingly, there are fair amounts of financial planners that specialize in this unique type of planning. Not only are there professionals available to help with your planning needs, but there are professionals that can help provide caretaker reprieve and breaks, drive parents to and from appointments, assistance with scheduling, and even meal planning. While these services may cost a bit more, they can give you peace of mind and a much needed break from the daily stress that comes with the role.
Seek personal support
It’s important to find a support group to help you navigate the ups and downs of taking care of your family. For starters, try checking social media for like-minded groups of people. Nothing is harder than doing something while thinking you’re alone. Additionally, family and friends are a good place to find personal support.
Bouncing ideas off someone, receiving validation, or just having someone to listen is helpful. If your family is having a hard time, refer them to websites or articles you have read, professionals you have talked to, or other support groups that deal with the trials and tribulations of the sandwich generation. Personal support may also look like professional support in that you may seek professionals to assume some of your responsibilities for your children or parents.
The bottom line
As a part of the sandwich generation, you may have a lot on your plate. Juggling your parent’s retirement, your retirement, and your children’s future is a lot to take on. That’s why everyone needs to talk about setting goals, budgeting, future planning, and supporting one another. Remember, you’re not alone and some outside services and professionals can help you. Utilize your local university or extension program, financial institutions, and even commercial banks or credit unions for some guidance. Doing the proper research and legwork now can help you and your family avoid future turmoil.
If you’re looking for an early retirement planning partner who can help you realize your financial goals, we have retirement planning offices in Redmond, Seattle, Mill Creek, the Tri-Cities region, and Denver. Our firm focuses on helping retirees and those preparing for retirement achieve financial freedom by creating a plan that shows them how they can have the income they need and want until they turn 100.
If you’re ready to take the first step to achieving your retirement goals, our team is ready to assist you. We’ve helped hundreds of couples and individuals smoothly transition into retirement with confidence, and we’d like to do the same for you.