10 July 2014
Tips for the Sandwich Generation: Managing Both Parents and Kids

As more Baby Boomers move into retirement, and more adult children are living at home after attending school, many families find themselves in the “Sandwich Generation” – sandwiched between caring for aging parents and trying to help their grown, or nearly grown, children.

Taking care of parents and kids at the same time can place your personal assets in jeopardy as you try to pay for both senior care and college tuition. Sandwich Generation families need clear guidelines and strict boundaries to maintain family peace and harmony.  Here are some suggestions to help those in the middle of this muddle:

1. Lower costs. If you’re living with three generations under one roof, there are things you can do to lower personal cash outflows and eliminate some of the stress that can sometimes occur when extended families live together.

  • Work a little longer. It gets you out of the house, it provides a regular dependable income, and it increases your Social Security payment each month when you retire later.
  • Explore every option for school financial aid. Talk to the financial aid officer at the institution to determine what grants and scholarships are available to lower the cost of a good education.
  • Share the workload.  Make sure grown children help with chores, and ask parents to help out around the house if they are able. This will eliminate some of the pressure on you and make everyone feel like part of the family team.

2. Expect adult children to pay rent even if they haven’t found the perfect job. Any job that pays a salary to your kids can help offset your expenses.

3. Sell it. If the folks are moving in, sell their old house. Have an estate sale to turn furniture into cash. At this stage of life, parents may need less, so sell it. You might be surprised at just how much that collection of figurines is really worth.  Don’t store it. Storage fees are just an additional expense.

4. Draw down parents’ investments. An IRA, SEP, Roth, 401(k) or some other investment vehicle may be worth quite a bit if the parents started investing 40 years ago.  If your parents do have assets and your home requires modifications to make it more comfortable for them as they age, ask them to contribute to the cost. First determine: (1) if the costs are covered by Medicare or insurance; and (2) if not, use parent’s assets to offset everything from ramp construction to in-home assistance to help lessen the financial burden on you.

5. See if you can claim your parent as a dependent. Claiming a parent as a dependent for tax purposes requires meeting a variety of conditions. Not all parents can be claimed as dependents simply because they live in the finished basement.  Always talk to the IRS or your tax accountant to determine what expenses you can deduct by claiming mom or dad as dependents.

6. Protect the future with long-term care insurance. The parents may be totally independent and helpful around the house, but as time passes, their circumstances may change. Consider purchasing of long-term disability or home care insurance using proceeds from parent’s assets. It can be a good way to protect you own retirement nest egg.

7. Keep your assets. You’ve worked hard to save for a secure retirement. Don’t use your investments to support your parents or your kids. Avoid the temptation to pay down your child’s tuition loans or send your folks on an expensive cruise. It’s up to you to save for your own future.

Be compassionate, helpful, honest, and straightforward with the entire family when dealing with two generations that could both use a little help.


The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice.


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