Living in the Sandwich Generation – A Balancing Act

Responsible for your children and your parents? This is for you.

It was the perfect birthday gift. Aaron Pearce, 45, sighed a breath of relief when his boss called him to the office and announced that he had been promoted from Assistant Manager to Manager at the telecom company he worked with. Finally, he would have the money to send his 17-year old daughter to medical college, buy a drum set for his 7-year old son, pay for the medical insurance for his parents who were well into their 60s and maybe even take that long-awaited vacation.

Aaron is part of the Sandwich Generation. It’s the term used to describe those in their 30s and 40s who take care of their parents as well as their children. It’s the place between playdates and doctors’ appointments, final exams and senior-friendly holidays, story-time and family time and sometimes… even baby diapers and adult diapers. These people juggle the needs, wants and dreams of not one, but many.

It’s never easy to one day find yourself being a parent to your parent. Caring for elders involves the delicate task of caregiving without treading on their dignity and self-respect. Add to this the pressure of preparing for your children’s higher education and it’s clear that being part of the Sandwich Generation makes it all the more important to take financially and emotionally balanced decisions.

Aadil Kadri, an expert on financial planning at Continental Insurance suggests:

“To minimize the stress and anxiety, it is important to prepare early and have plans in place. The alternative is to face the risk of a major family crisis right around the time you’re taking the car keys from your parents and giving them to your teenager.”

Kadri offers advice that could pave the road to a confident and successful future for those in the Sandwich Generation.

• Help your parents develop a sustainable retirement income plan – have the ‘money talk’ with them. It’s important to bring up the topic to avoid the risk of them outliving their retirement nest egg. Longevity concerns are real and there is an estimated 45% chancethat at least one member of a married couple will live into their 90’s. Various factors have an effect on retirement income such as your rate of return on savings and investments, the anticipated length of retirement, inflation, taxes, spending, part-time earnings, social security, pensions, etc. Help them achieve a regular income plan by investing their money in different asset classes based on their risk appetite and financial objective. Additionally, at retirement, there are three types of expenses that require regular income:
  • Fixed expenses: utility bills, groceries, pay channels, etc. – this can be achieved by investing in Guaranteed Return Plans like Fixed Deposits and Fixed Income Mutual Funds.
  • Medical expenses: in most cases, retirees don’t have coverage from their employers anymore and the cost of medical expenses increase at that age too. Along with Guaranteed Return Plans like Fixed Deposits, it is also advised to set aside a lump sum for unforeseen circumstances.
  • Variable expenses: holidays, weddings, birthdays, pilgrimage etc. – these can be achieved by investing in mid-term to long-term Balanced / Equity-Based Mutual Funds to make the most of the market.
• Save money for your own retirement – Research shows that over half of the working-age households in the world are at risk of not being able to fully meet their retirement income needs. Don’t be part of that half. Take the time to run a pre-retirement calculation for yourself to see if you are on the right track and make sure you re-evaluate your preparedness on an ongoing basis as changes in economic climate and inflation will impact your plan. As a rule of thumb, you should aim to have a retirement fund that is equivalent to at least 70 to 90% of the income you have earned over the years. But if you’re worried about medical bills and/or plan to travel a lot, you may want to aim higher.
• Have the right protection plans in place – critical Illness, long-term care, medical and life Insurance; there are many tools designed to support you and your family in times of need. As the saying goes, “It is better to have it and not need it rather than needing it and not having it.” While it is never possible to be emotionally well-prepared for an untimely medical illness and even death, you can rest assured that you are financially prepared. Combat these ‘surprises’ by planning for and investing in relevant plans that will ensure that when the time comes, you are there to hold your family’s hands rather than chasing for finances to make ends meet.
• Invest in an education savings plan – there’s no doubt that an estimable education is essential in today’s competitive environment. However, fluctuating economies and rising costs of living make it imperative to have a disciplined and robust savings plan that will ensure your child can achieve their goals. While scholarships, grants, and work-study programs are options to encourage your children to independently contribute to their own college education, saving for your child’s post-secondary education is certainly one of the greatest single investments you can make for their future.
• Create and review important estate planning documents – reviewing the family estate plans is more than just a ‘who gets what’ discussion. Estate planning helps pass along family values and stories. Having important documents such as wills, trusts and powers of attorney in place ensures there are no conflicts in the future and also provides parents with peace-of-mind knowing their intended wishes and goals are fulfilled.
• Take an inventory of your assets – get organized and create some efficiencies for yourself first, and help your parents and older children do the same. Legal certificates, savings accounts, investments, credit cards and retirement accounts – locate all the original documents, create a filing system for them and keep digital copies on a separate hard drive. Take the help of a good financial app that will help you get organized (try the Mint app). While apps are low cost and help specific needs, remember that they don’t replace the expertise of a financial advisor who takes the time to understand your holistic needs and address the global requirements of the entire family.
• Seek professional support if needed – you don’t have to do it all on your own. When it comes to taking care of your parents and your children, a little professional help goes a long way.
  • Attorneys can help create crucial estate planning documents
  • Financial planners can help you stay on track with a personal financial plan and help guide you towards finding some balance with life’s competing priorities

Being in the Sandwich Generation is a role and stage of life for which no one can ever rehearse. Every family and every relationship is different. So, bring your family together, have an open dialogue, understand each other and find the unique formula that helps you take care of your parents, your children, your spouse and yourself.

“On a personal front,” Kadri concludes, “take care of yourself. Go to the gym, do regular health check-ups, kick that bad habit, find a hobby and get good at it; and take a yearly vacation without feeling any guilt because you are doing all you can for your parents and your children. You deserve it!”

Continental Financial Services has provided examples of Apps and Online Calculators in this article for information purposes only and in no way or means recommends or guarantees the result of the use of such platforms. It is suggested that you speak to your financial advisor and do your own research before making any financial planning or investment decisions. Continental Financial Services does not take any responsibility for liabilities or loss caused due to investments or investment decisions made on any of these platforms.