Pocket Change
Lori L. Embrey
If it isn't challenging enough to fund the kids' college
savings accounts and save for your retirement at the same time, consider
this: millions of Americans - "The Sandwich Generation" - has
the added responsibility of caring for their aging parents. I've also
had occasion to advise the so-called "Club Sandwich" family,
who is sandwiched between their aging parents and their adult children
and grandchildren.
While the physical, emotional, and financial demands on
these caregivers are tremendous, they are typically accepted without question.
After all, our parents cared for us for many years, why shouldn't we feel
responsible for their well-being in their older years (which may be far
less than golden)? When it comes to our adult children and other family
members, it can be difficult to deny them access to our resources, especially
when they have children of their own. These competing goals and demands
on our financial resources can be a recipe for disaster. Prepare yourself.
Here are a few financial tips to help.
Start saving now
Your mother always told you to save for a rainy day. Members
of the Sandwich Generation will probably tell you that they're in the
midst of the perfect storm. And who really knows when and where it will
strike? If your assistance is needed, you'll have more resources available
to help provide for other family members if you are already well on your
way to funding your own goals. There are a number of resources available
to help you to determine how much you'll need to save for retirement and
college.
Avoid surprises
Talk with your parents and children about their financial
situations. Find out what plans they've made for illness, incapacity,
disability, or death. These important documents are a must:
- Power of attorney for financial matters
- Power of attorney for health care
- Living will
Make it easier to conduct financial business for an aging
parent by obtaining a power of attorney. In the case of an emergency,
a durable power of attorney will authorize you to sign checks and make
financial decisions on your parents' behalf.
A power of attorney for health care authorizes someone to
make health care decisions on behalf of your aging parents or your adult
children. This, in combination with a living will, allows you to direct
your health care if you become unable to communicate your wishes. Many
states have designed Advanced Directives forms that can be completed without
the assistance of an attorney.
Find out if your parents or your children have an estate plan. It is
a misguided notion that you need to have a lot of money to have an estate
plan. While you may not need an elaborate plan, everyone needs a plan.
A simple will and accounts that "transfer on death" (TOD) may
do the trick to avoid time-consuming probate hassles and unnecessary taxes
upon the death of your loved one. A visit with an attorney (one whose
primary practice is that of estate planning) is likely to be money well
spent.
Ask your children about insurance. Do they have a disability policy through
their employer? We are much more likely to become disabled than to die
prematurely, so make sure this base is covered, either by an employer
policy or an individual policy. Life insurance may also be available through
your child's employer. If your child is raising children of their own,
help them understand the importance of providing for your grandchildren
in the event of their death.
Take care of yourself
As much as you want to help your family members in need,
make it a priority to care for yourself first. This may sound selfish,
but it has a solid foundation. While there are government programs that
will provide assistance to your aging parents or adult children in need,
there are no such programs to help you fund your retirement plan. You
might also consider that the financial decisions you make today may put
the squeeze on your children's finances down the road.
Lori
Embrey, MS, CFP? is principal and founder of Fairfield Investments & Wealth
Management, LLC with offices in Pickerington and Arlington. Lori is also
a frequent lecturer for The Ohio State University's Family Financial Management
program.
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