Welcome to the Ready Set Retirement Blog, my name is Derrick Glencer I am a CERTIFIED FINANCIAL PLANNER™ Practitioner. The Ready, Set…Retirement Blog focuses on the financial planning questions and concerns of Gen X Execs and Soon to Be Retirees.

If you are considered part of the Gen X Generation like myself, you better get used to these two new terms Sandwich and Boomerang.

Today we are going to discuss those terms and what they mean to members of Gen X. Specifically tips on how to handle aging Parents and young adult children.

Have you heard the term “sandwich generation,”?

The sandwich generation is defined as those who are caught in the middle of having both parents and adult children who rely on them for financial support.

So who is in this sandwich generation?

The short answer is Gen X. Those of us born between 1965 and 1980.

Nearly half (47%) of adults in their 40s and 50s have a parent aged 65 or older, and are either raising a young child or financially supporting a grown child age 18 or older, according to a nationwide Pew Research study.

Gen Xers are textbook Sandwich Generation.

The Urban Institute reports that each kid costs about $234,000 over the course of the first 17 years of life and aging parents can require $140,000 in assistance.

Here is some good new for us Gen Xer’s we know how to deal with financial stress: According to the Pew Research Center we currently rank as the only U.S. generation to completely recover the wealth lost due to the Great Recession. That’s the good news!

However, during the COVID-19 pandemic we had a record number of adult children moving back home. Meanwhile aging parents are needing more care. For those of us squashed in the middle of that dilemma we often have to make difficult choices between saving for their own retirement, funding education or living expenses for children, and paying for the health care needs of our aging parents.

So if you fall into this category or if you think that in the future you may have to deal with either of these situations how do you prepare and prioritize financially speaking.

#1) Your top priority should be your own retirement

When I started in this business and my clientele was often newly married couples, they would often say how funding college was a top priority. I always pushed back on this. College funding for children is a great goal but it has to fall beneath funding your own retirement.

So I’m here to tell you to be selfish when it comes to retirement funding. When it comes to retirement there just are not that many safety nets. You are not being selfish by putting your own needs first, quite the contrary, you are making it possible for you to help your family members by being financially stable yourself.

Here are a few tips for making sure you that you are on solid financial footing for your own retirement savings:

1. Work a financial adviser to develop a game plan to hit your retirement savings goal.
2. Fully fund your retirement plan options. Make sure you are realizing the benefits of tax-advantaged employer 401(k) plans (especially if your employer has a matching benefit) or IRA accounts. Consider using a Roth IRA if you qualify under the income limits or if your employer sponsored retirement plan contains a Roth provision.
3. Consider whether purchasing long-term care insurance is right for your situation. Your financial adviser will be able to help you evaluate whether you want to invest in a policy now to help pay for your future care needs.

Once you have checked those boxes, you can move on to your parents.

1. Review all the assets available for your parents’ support. Consider if you can sell or use the equity in your parents’ home to pay for care needs.
2. If there are not adequate assets, consult with an elder care law attorney to determine whether your parent is eligible for state benefits, like Medicaid.
3. If your parents are still in good health but financially you know they are going to need assistance in affording Long Term Care for themselves, consider purchasing a LTC policy on their behalf, especially if you have siblings that might be able to contribute as well.

Now that your parents are squared away let’s talk about those kids.

So young adult children or adult children that have moved back home to live with their parents are consider Boomerang Kids. I see a lot of parents struggling with this. After I graduated from college my mom started charging me rent. For some of you that might seem like a horrible thing to do, but the problem I see with parents dealing with a Boomerang Child is that they are making living at home too comfortable. If they have to pay rent, even if its discounted compared to the market, this will show them two things:

1. You have faith in them.
2. Living on their own really is a better option even if it costs more.

If you feel awkward about taking money from you child for rent, you can always set it aside and then return it to them when the elect to move out!

If you have minor children who you want to help pay for college,

1. Consider a 529 savings plan. Some states provide tax advantages for saving in 529 plans, and other family members can gift funds for the benefit of your children as well.
2. College loans are also available. Current interest rates are very low, making college loans attractive for financing education expenses. However, make sure your adult child understands their repayment responsibilities.

A qualified financial adviser can provide you good advice for options available to pay for elder care and assistance to your children while still achieving your own retirement goals. This will free you up and leave you the emotional and physical energy to continue assist in caring for your loved ones without being sandwiched in the middle of competing needs.

Again, my name is Derrick Glencer I am a CERTIFIED FINANCIAL PLANNER™ Practitioner and this has been another episode of Ready, Set…Retirement If you enjoyed this content you can book a complimentary consultation via Calendly at: https://calendly.com/djgcfp

Or directly through email at:
derrick.glencer@raymondjames.com

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Thank you very much and go make it a great day!

As with other investments, there are generally fees and expenses associated with participation in a 529 plan. There is also a risk that these plans may lose money or not perform well enough to cover education costs as anticipated. Most states offer their own 529 programs, which may provide advantages and benefits exclusively for their residents. The tax implications can vary significantly from state to state.

These policies have exclusions and/or limitations. The cost and availability of Long Term Care insurance depend on factors such as age, health, and the type and amount of insurance purchased. As with most financial decisions, there are expenses associated with the purchase of Long Term Care insurance. Guarantees are based on the claims paying ability of the insurance company.

The information covered in this podcast represents the views and opinions of the Derrick Glencer and his guests and does not necessarily represent the views or opinions of Raymond James. Raymond James is not affiliated with and does not endorse the opinions or services of any of the quoted professionals or their respective firms. Expressions of opinion are as of this date and are subject to change without notice. Any examples or case studies are for illustrative purposes only. Individual cases will vary. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including asset allocation and diversification. Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

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