My husband and I are very proud of our three children who are currently in various stages of college. We’re also blessed to have some of our parents still with us. We’re in the midst of the “sandwich years.” Our children are transitioning into adulthood and our parents are dealing with the prospect of additional – and often much higher – health care costs.
The situation certainly isn’t new, but the financial challenges of this particular age group have recently changed. In addition to your retirement fund(s) likely taking significant losses during the financial crisis, those of us currently in the sandwich years also face the financial challenges of our children and parents. Our kids are graduating into an extremely difficult job market, while our parents are dealing with the rising costs of health care on a fixed income. With these challenges, sometimes our parents and kids may need our help financially.
Don’t wait until you and your family are faced with these issues to begin dealing with them. Usually if a financial emergency occurs, you won’t have much time before you have to act. In my thirty plus years at UMB, I have seen customers in the middle of these transition years who haven’t had important discussions with their kids or their parents soon enough. Living in an area with a high concentration of retirees‡, I’ve seen countless children of senior parents who have waited too long to talk to them about their financial plans.
So what can you do to plan for the sandwich years?
Prepare your children for financial independence by:
- Opening a college fund as soon as possible (your kids don’t have to be burdened with student loan repayments while they work to become financially stable).
- Teaching them the foundation of financial responsibility at an early age.
- Encouraging them to hold part-time jobs as teenagers to develop a strong work ethic early on, and learn the benefit of saving and budgeting.
Prepare your parents for the issues they will face by:
- Having an open dialogue about their overall financial situation, while being respectful of their privacy and wishes.
- Approaching the sensitive subjects of having a will, power of attorney and health care directive. They are difficult conversations, but it’s better to have them early. It is much harder to discuss finances when failing health and/or mental incapacity have occurred.
Prepare yourself for the sandwich years by:
- Talking regularly with your financial advisor about what you need to do to prepare for your own retirement.
- Creating an emergency fund. You don’t want to dip into your retirement fund if something should happen and your kids or parents need financial help.
The sandwich years can be very stressful but that stress can be greatly reduced if you plan ahead. Prepare your children to become financially independent young adults and ensure your parents have a financial plan for their senior years. And don’t forget to make your own financial preparations. Your children will thank you for it when they reach their sandwich years.
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Ms. Porter is senior vice president and financial center manager for the Eastgate location in Warsaw, Mo. She joined UMB in 1981. Ms. Porter is responsible for managing the consumer sales and functions of that location and has been involved in many other areas of the bank in her thirty-two years with UMB. Actively involved in the community, she has worked closely with the Warsaw High School vocal and instrumental departments for many years. She is a trustee of the Mary Lay Scholarship Fund, currently serves on the Harbor Village Fund fundraising committee and is a board member of the Warsaw Area Chamber of Commerce.
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