Simultaneously raising your children and caring for your
aging parents isn't easy. The pandemic has made it tougher.
Known as the "sandwich generation," Americans
supporting kids and parents as well as themselves are facing skyrocketing costs
and a hit to their savings, a new report from New York Life found.
More than half, 54%, of those surveyed said they were
spending more each month on caregiving since the start of the crisis, with 23%
reporting an extra $200 or more per month.
"Higher costs have equated to cuts elsewhere: Sandwich
generation members report contributing less to their savings and to retirement,
raiding emergency funds, paying off less debt and delaying paying bills,"
said Dylan Huang, senior vice president and head of retail annuities, investment
solutions and wealth planning for New York Life.
On average, they are spending about $1,000 a month to care
for an aging relative. Almost 70% are using money from their daily budgets to
pay for it, 40% are contributing less to their savings and 30% are saving less
for retirement, the report found.
There has also been a shift in the demographics, accelerated
by the pandemic. Covid-19 played a major role in the decisions to begin
providing care for an aging relative for 26% of respondents. Half of those
surveyed, 52%, said the pandemic played some role.
As a result, the sandwich generation has become younger,
more female and more diverse, the paper found.
Forty percent of millennials were more likely to be caring
for an aging parent during Covid-19 than pre-pandemic, compared to 34% of Gen
Xers and 13% of baby boomers. New York Life defined millennials as being born
between 1981 and 1996, Gen Xers as 1965 to 1980 and baby boomers as 1946 to
1964.
"It's critical for the millennials of the sandwich
generation to establish a financial strategy that can balance 'right now' with
'down the road,'" Huang said.
For Gen X members, checking in on retirement planning is
crucial because they have less time to catch up and may need to delay
retirement, he said.
It's also important to take into account long-term care
insurance, powers of attorney and medical directives, added certified financial
planner Tyler Huck, a financial advisor for Atlanta-based oXYGen Financial.
If you or your family didn't save money for long-term care,
you my consider buying LTC insurance. While traditional policies are expensive,
there are life insurance plans that also provide long-term care coverage.
"Setting this up for your parents or even yourself to
prevent your children from being in the same boat is smart," he said.
Meanwhile, a durable power of attorney provides you, as your
parents' caretaker, the legal authority to make decisions for them if and when
they become incapacitated, and a health-care power of attorney allows you to
handle their medical decisions.
Your parents can express their wishes for medical treatments
in a living will, also called an advanced directive,
"These items are essential pieces to a financial
plan," Huck said.
In the end, it's about trying to find a balance between your
caregiving responsibilities and your retirement goals.
"By ensuring your own financial future … you are able
to better care for yourself and your loved ones and are incorporating all the
vital elements of a protection-first financial strategy," Huang said.
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