Retirement And The Sandwich Generation

By: Jan Paul C. Ferrer

 

Amultitude of economic, social and cultural factors have given rise to many middle-aged Americans providing fi nancial, emotional and physical support for their young children, adult children and parents at the same time, often with multiple generations living under one roof. Caring for children while caring for parents, while also trying to manage your own personal and professional priorities, can be challenging.

One of the main concerns facing the Sandwich Generation is: “How do I plan for my own future – my own retirement needs – while I’m also balancing the immediate needs of my family?” By addressing the three questions below, you can start to fi nd your balance.

What Are My Needs?

Flight attendants tell you to put on your own oxygen mask fi rst before helping others and this is no diff erent. The fi rst step is to create a personal budget.

1. Determine Your Income. Specifi cally, you’ll want to determine your average monthly income. If your income varies by month, estimate by averaging the past six to 12 months.

2. Evaluate Your Emergency Fund. Maintaining access to cash in a checking or savings account in case of an emergency is essential. Your emergency fund should be separate from your day-to-day cash, and if you can, put away enough to cover at least three to six months’ of expenses.

3. Plan for Savings & Surplus. If you have surplus in your budget, it may be challenging to decide what to do with it. As a dual caregiver, there are an unending number of things you could do with that money, but sometimes the most important thing is to pay yourself fi rst. A good rule of thumb is to save for your retirement ahead of your children’s college funds and your parents’ potential future care needs. Be sure to work towards paying off any debt and evaluate your insurance needs.

What Are My Children’s Needs?

One of the biggest expenses of raising a child is education. If they’re young, consider whether private school tuition is going to be necessary. There may also be the added expenses of books, extracurricular activities and tutors. If you can swing it without sacrifi cing your own retirement needs, you may be able to start investing in a 529 College Savings plan, and begin investing with a minimum.

If your children are planning to move back home with you after college, it’s important to set expectations. Talk through everything from rent and shared expenses to division of household chores. Don’t neglect the impact this situation will have on your own retirement goals.

What Are My Parents’ Needs?

Navigating the needs of your parents can be emotional and tricky. But staying in the loop on what your parents have saved, where it is, what plans they have for the future, and who their Financial Advisors are, will help protect their money and yours. You’ll also be better able to make decisions on their behalf in case of an emergency.

Potentially assisting your parents with budgeting for their current and future needs is important. The good news is that you can use the same process you used to create your own budget. Include discussions about their desired standard of living – and what changes would need to happen, given fi nancial constraints. Don’t forget the hard questions: How long can my parents stay in their home? Can they aff ord home health care? Should they live with me? What about assisted living? Additional care? These are all discussions that need to happen before a move is required.

Finding Your Balance

Dual caregiving can be a balancing act. Don’t forget to make yourself a priority. By creating a clear picture of the needs of every generation under your care, you can map out strategies and solutions that help your entire family thrive. And if you need additional guidance on how to balance this big picture, don’t hesitate to reach out to a fi nancial advisor for help.

Important Disclosures:

Article by Morgan Stanley and provided courtesy of Morgan Stanley Financial Advisor.

Jan Paul C. Ferrer is a Financial Advisor in Chicago, IL at Morgan Stanley Smith Barney LLC (“Morgan Stanley”). He can be reached by email at janpaul.ferrer@ morganstanley.com or by telephone at 312 312-419-3535

This article has been prepared for informational purposes only. The information and data in the article has been obtained from sources outside of Morgan Stanley. Morgan Stanley makes no representations or guarantees as to the accuracy or completeness of the information or data from sources outside of Morgan Stanley. It does not provide individually tailored investment advice and has been prepared without regard to the individual fi nancial circumstances and objectives of persons who receive it. The strategies and/or investments discussed in this article may not be appropriate for all investors. Morgan Stanley recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a Financial Advisor. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.

Investments in a 529 Plan are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so an individual may lose money. Investors should review a Program Disclosure Statement, which contains more information on investment options, risks factors, fees and expenses and possible tax consequences. Investors should read the Program Disclosure Statement carefully before investing.

Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its affi liates and Morgan Stanley Financial Advisors and Private Wealth Advisors do not provide tax or legal advice. Clients should consult their tax advisor for matters involving taxation and tax planning and their attorney for matters involving trust and estate planning and other legal matters.

©2021 Morgan Stanley Smith Barney LLC. Member SIPC. CRC# 3650527 07/2021