You might have heard of the sandwich generation but are wondering what it is exactly.
Although there’s not a single definition, Meagan Dow, a certified financial planner and senior strategist at Edward Jones, said in an email that it typically refers to those who are sandwiched between providing support to a younger generation like children and an older generation like aging parents.
“We see millennials, Gen X and baby boomers facing the challenges of trying to support themselves and two other generations simultaneously,” Dow said.
If you’re in that situation, read on for five tips on how to navigate the financial pressures.
1. Take Care of Your Own Needs
If you’re an adult providing support to both generations, first pay attention to your own needs.
“Many caretakers put themselves last, but this puts their own well-being at risk,” Dow said.
“The old adage about putting your own oxygen mask on first applies, which means both being aware of what you need and ensuring your needs are being met,” she added.
2. Seek Guidance From Money Pros
Whether it’s meeting day-to-day expenses, juggling short-term goals or planning for long-term goals like retirement, Dow said working with a financial advisor can be very helpful.
A financial professional can help arrange your investment accounts and ensure you’re invested according to your risk tolerance and timeline for retirement and other important goals.
They can also aid in making a budget designed to continue to prepare for the long-term while meeting the current necessary needs.
[Read: How to Make a Budget — and Stick to It.]
Craig Copeland, director of wealth benefits research at the Employee Benefit Research Institute, said in an email, “Each person’s circumstances will be different, so working with the professional who has experience in establishing budgeting and savings goals with the additional burdens of caring for two generations can provide the specificity needed to reach both short- and long-term goals.”
3. Set Priorities
Parents of young children are likely to put their children’s needs first, but Dow said many in the sandwich generation provide financial support to adult children, and it can be difficult for parents to find a healthy balance without hurting their own financial situation.
“And the same can be said for helping aging parents, which many view as a responsibility,” she said. “This, too, is an area where a financial advisor can help, as they can run scenarios to show the impact of different kinds of financial support.”
[Related:Younger Parents Are Moving In With Kids: Here’s Why]
4. Try to Limit Debt
Pay attention to your credit card use and if you do have debt, aim to pay it off. One strategy, referred to as the avalanche method, is prioritizing the debt balances with higher interest rates first while making minimum payments on others, Lauren Wybar, a certified financial planner and senior wealth advisor at Vanguard, said in an email.
5. Consider Asking Family and Friends for Help
Wybar said that if saving for your children’s education is a goal, you may want to consider opening a 529 account, a popular education savings investment account that anyone can contribute to.
“That way when birthdays or holidays roll around, you can request 529 contributions instead of cash or physical gifts,” she said.
How to Manage Long-Term Goals Like Retirement
Amanda Carsten-Steward is senior vice president at Athene, a company that helps clients achieve their goals for retirement savings and income.
She cited recent company research in an email regarding how those in a sandwich situation are facing tough choices regarding retirement planning.
The survey revealed that almost half (47%) of survey respondents said they’re putting off retirement to offer financial support to aging extended family or adult children.
“There will have to be some ‘no’s’ in order to meet the basic needs of all while not putting yourself in need when you retire,” Copeland said.
For example, perhaps you should stop paying for your adult child’s apartment in an expensive city. Just think of all the money you could be saving for retirement with that money.
Wybar said that if saving the recommended amount of 12% to 15% of your annual salary (including employer contributions) for retirement is too steep, you should to contribute at least enough to get your company match.
“Then, ramp up your contributions whenever your budget allows,” she added.
She also said that whenever you receive a windfall of cash, say from a company bonus or inheritance, plan to allocate a big portion of it to your retirement accounts.
“You may also want to consider working longer to provide more time to boost your retirement savings,” she added.
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Money Tips for the ‘Sandwich Generation’ originally appeared on usnews.com
