According to a 2024 report from Natixis Investment Managers, 48% of Gen Xers feel they won’t have enough money to enjoy their retirement, with 28% of respondents sharing concerns that they’ll have to return to work after retiring. The report noted that this generation of people born between 1965 and 1980 can feel stuck between the financial responsibilities of supporting their children and trying to care for their elderly parents.
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Take Care of Your Finances First
“While the demands of caring for aging parents and children are significant and sometimes acute, sandwich caregivers have to remember to stabilize themselves first,” said Renée Campbell, the executive director of youth and family banking at Chase Bank. “Another mistake we see is that working parents will save for their child’s education before ensuring they have an adequate emergency fund and retirement savings for themselves.”
It’s worth noting that options like student loans or grants and scholarships can help fund a college education; the same can’t be said for Gen X’s retirement savings as they get closer to leaving the workforce. You want to do your best to handle your own finances first because you want to ensure that you have enough saved up for retirement so that you don’t end up working into your 70s.
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Andrea Woroch, a consumer and money-saving expert, said you should try to create passive income streams, as this can help pay for unexpected costs. “We actually purchased a property for my mother to live in. She was planning to rent a condo, so rather than her money going to someone else, she can pay us a small rent that can be invested back into the family/her grandkids in the future,” she said.
As you try to balance caring for two generations and planning your retirement, you should take the time to manage your investments so that you will have funds available in the future.
Save For Your Child’s Future
If you have your own finances in order, you can start thinking about planning and saving for your children’s future. “Start saving for your child’s future by opening a 529 college savings plan and/or a UGMA account,” Woroch said. “Make monthly contributions and ask family and friends to contribute towards these accounts in lieu of gifts for birthdays and other celebrations.”
This will help you and your children out so that they have the funds for their education in the future. That way, you won’t have to worry about tapping into your retirement savings to help them out. The sooner you start saving for your child’s future, the more time you’ll have compound interest on your side.
Have Important Financial Discussions With Family Members
“Start having money conversations with parents and any siblings early on to understand what types of financial help they may need and how everyone can help,” Woroch said. “This also includes listing out all your parents’ bills/expenses and account numbers so that you can have it all before something serious happens when it could become more complicated to figure out.”
If you’re caring for your elderly parents, you’ll want to ensure that you have important conversations so you’re not stuck scrambling in the future. The general sentiment from experts is that you should start by having challenging discussions with everyone involved to set expectations before it’s too late. Tough conversation could help you set boundaries and provide much-needed clarity ahead of emotional decisions.
Help Your Parents Save Money
Woroch pointed out that you should try to help your parents find ways to save on bills. “Older consumers can easily be taken advantage of or miss out on saving opportunities, and spending a few minutes going through their accounts may help you uncover unnecessary services, discount options, or even help them bundle services or negotiate savings,” she said.
By helping your parents with their finances, they may require less assistance from you so that you can take care of your own finances.
Research Costs for Long-Term Plans
“Start researching costs for helping your aging parents, whether this includes costs for at-home care or moving to an assisted living facility so you can plan wisely for when the time comes,” Woroch said.
Even if your parents are still youthful and healthy, you want to ensure that you’re prepared for the future because you may not have the infrastructure to have three generations living in one home.
Don’t Wait Until Your Parents Get Older To Handle Legal Documents
Campbell pointed out that while we all like to think that our aging parents will never experience cognitive decline, this is likely wishful thinking. Any matters involving legal or financial documents, like a living will or power of attorney, should be handled earlier rather than later. Campbell stressed the importance of planning ahead while things are calm. You’ll want to discuss options and make decisions together with your parents.
“Act now while things are relatively calm to locate and organize you and your loved ones financial and legal documents. This includes any investments, pensions, Social Security, VA benefits and insurance policies,” she said. “For investment accounts, you can be added as a Trusted Contact Person, which will allow the brokerage firm to contact you if there is errant activity on the account or if they have questions about your loved one’s well-being.”
Staying organized is imperative because you don’t want to be stuck in a situation one day in the future where you have to make stressful financial decisions about your parents without any preparation.
“Transparency is key — if you want to avoid your aging parent feeling as if they’re losing control, keep them involved in some way in your family financial decision-making process,” Campbell said.
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This article originally appeared on GOBankingRates.com: Finance Experts: 7 Tips for Gen X To Balance ‘Sandwiched’ Finances Between Parents and Kids
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