Money in the Middle

Sandwich Generation Talking About Money Up, Down and Across Generations

Get Your Retirement Plan Priorities Straight

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Are your retirement funds slipping away?  It might be because retirement funds are being funneled off to help others. Good intentions.  Bad consequences.

 A new survey from Schwab says that almost half of retirees report supporting family members that they hadn’t planned for.  Children (53%) and grandchildren (37%) top the list of dependents.  An additional 12% are contributing to their parents’ finances.  The retirement reality of the sandwich generation.

 So are we doing what we should be doing? If you are putting your own retirement planning behind your adult children or parents – then the answer is “no”.  Why?  Because you are at great risk of continuing the cycle and putting yourself at financial risk.  

 Schwab says your retirement should take priority.  We agree.  Knowing what you need financially to retire, understanding the steps you have taken to control some of the risk (long-term care insurance, life insurance etc.) and how long you need to work are key.  If this economy has taught us nothing else, the unexpected can happen.  So the more you can shore up your own retirement, the better off you and your family will be.  

Helping aging parents.  After you have your retirement plan pinned down, you can turn to helping aging parents.  It can be simple things like helping make sure they have the right Medicare coverage, that their investments are appropriate for their stage of life or providing help with bill paying.  Or it may be helping them sort through local resources.  If they are in need of care assistance, check with your local Office on Aging to see if they are eligible for any community services.  Though cutbacks in state budgets are having their impact on senior services.  If you are still working, your company may offer elder care services which can help you identify resources.

The kids are last.  They have time you don’t to rebuild.  and this can be one of those teachable moments about the importance of an emergency fund and budgeting.  Help as you can with housing or small expenses, but to take on additional debt to help them just doesn’t make financial sense.  Let them carry the school loans or figure out how to pay off their own credit card debt. “Encouraging their financial independence now will actually be to their benefit in the long run,” Schwab advises.

 Hard advice to follow?  Smart retirement planning.

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Written by Laura Rossman

September 9, 2009 at 3:20 pm

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