What Would You Like on the 'Sandwich'?
May 15, 2008 Many baby-boomers are trying to balance supporting a parent while also either raising a youngster or providing financial help to an adult child, according to the Pew Research Center.
These responsibilities can put a squeeze on adults in their middle years, sometimes known as the "Sandwich Generation."
The Pennsylvania Institute of Certified Public Accountants recommends that this group take a number of steps to cope with competing financial demands.
· Set up a college fund. Over the past decade, tuition and fees rose 54 percent at four-year public universities and 33 percent at four-year private colleges, according to the College Board. Given this continuous rise, CPAs advise parents to begin setting aside money as early as possible for this significant expense and to investigate tax-advantaged savings options such as 529 plans.
· Learn about your parents' finances. Adult children often are reluctant to question their parents about money, but it's important to understand their financial situation so that you can be prepared to help them when they need it.
Ideally, you want to determine what they receive in pension and Social Security payments, and how much they have in savings. Find out about fixed expenses, too, such as mortgage or rent and utilities. Don't forget to factor in medical expenses, including the cost of health-care insurance, medications and provisions for emergencies.
Asking your parents about these details may be awkward, but when you are informed, you're in a better position to help.
· How about long-term-care insurance? Family finances can be devastated by lengthy nursing home stays or in-home care costs. That's why you have to find out whether your parents have long-term-care insurance to cover these expenses.
If they are not paying for this insurance themselves, double check to see if it is part of their former employers' retirement package. If they're not covered, consider whether this insurance would be a wise choice.
· Don't neglect your own needs. You can't help others if you are not on firm financial ground yourself. Remember to continue to set aside money for your own retirement. Be sure to take advantage of tax-deferred savings options, such as your employer's 401(k) plan or an individual retirement account, to maximize your earnings.
By focusing on your retirement, you'll set the foundation for a secure financial future, and ensure that your own children will not have to help you in your later years.
A special Web site has been created that addresses financial concerns at every life stage. Log on to: www.360financialliteracy. org and click on "Sandwich Generation" to learn more about the special issues facing this group.
