In between Baby Boomers and Generation Xers, another group has emerged, dubbed “the sandwich generation.” These are middle-aged adults between 40 and 59 whose financial and emotional responsibilities are increasing due to aging parents and debt-laden kids. According to a 2013 Pew study, nearly half of adults in the sandwich generation have a parent age 65 or older and are either raising a young child or financially supporting a grown child, age 18 or older.

Naturally, the added responsibility brings with it a certain amount of financial strain. 11 percent of middle-aged adults say they don’t have enough money to meet even their basic expenses and 30 percent are just able to meet their basic expenses.

There’s not a quick fix for this situation. Our parents need care and it’s our responsibility to assist them, if we are able. At the same time, the Millennial generation is saddled with student debt. Many students move home because they are trying to pay off loans as soon as possible. If they do get gainful employment, most of their income goes toward loans rather than helping out with household bills. Parents are loathe to kick out recent graduates who need help getting started.

In these situations, Providers tend to put their own goals aside. They direct their funds to caring for others instead of saving for retirement or paying down a mortgage. However, it’s very important that you still meet your basic needs. Consider these four tips to stay financially safe and sane while you are caring for your loved ones.

1. Create a plan

For those middle-aged adults who aren’t sandwiched yet, tough finance decisions may be just around the corner. Begin working on a plan now before a situation requires immediate action. Take a look at the timeline and try to estimate exactly when you’ll need to start providing assistance, if you don’t already. Have a conversation with your parents about where their savings stand and if they can shave off any unnecessary spending. How much will they need to live on? How much will healthcare cost? What savings do they have? If they have a portfolio, is it being managed correctly? It’s difficult to know exactly what their scenario will be but looking at their current spending is a good place to start.

2. Get an outside, objective person to help implement the plan

Whether it is a financial advisor, estate attorney or trusted friend, having an objective third party to communicate with parents and kids can help clarify the family goals. Aging parents may be more apt to listen to a financial advisor than their own son or daughter. For college-aged kids or recent graduates, financial education from a third party may empower them to take control of their living expenses and move out on their own.

3. Don’t steal from your own retirement savings

After the Great Recession, many middle-aged adults found themselves with the same amount of expenses but drastically lower income due to job losses or pay cuts. While as many as 9 million jobs have been recovered, many people make far less than they once did. But raiding your retirement savings in order to pay the bills is going to hurt your finances in the long run. Retirees often regret not starting their savings earlier. If you have to take on new financial responsibilities, don’t cut your retirement savings first. Evaluate your budget and see what else you can drop.

4. Consider your house as an asset

If you are working hard to pay the bills but barely scraping by, it may be time to think about your home as an asset. You may love your house but at the end of the day it’s just four walls, a ceiling and a floor. A home is where you celebrate the special moments in your life and you take those with you wherever you go.

If you own equity in your home, consider selling or renting it out. Selling could provide you an opportunity to get your expenses in order without touching your retirement savings. If the thought of selling your home is daunting, consider renting it. You could find a more affordable place to live and have the option of returning to your house when your financial scenario improves.

Preparing for the next stage of your family’s life is difficult because there are so many unknowns. But you’ll save yourself time, money and stress if you expect the unexpected.

WSB Radio’s Ilyce Glink Show – July 6, 2014

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