Sandwich Generation Dilemma: How to Balance Your Own Retirement Needs With Caring for Younger and Older Dependents
Keep Your Retirement Intact by Separating Emotion from Finance
Caught between supporting kids, caring for aging parents, and planning for their own retirement, many Americans in the Sandwich Generation, adults 40-60 caring for both younger and older dependents, are struggling to balance financial and emotional challenges during the recession. According to Age Wave’s 2009 Retirement Tipping Point Report, 40% of the Sandwich Generation now worry they will have to financially support their parents or in-laws.
Allianz Life Insurance Company of North America (Allianz) emphasizes that Americans should strive to keep their retirement intact by separating emotion from finance and focusing on the magnitude of the issue rather than chronology. This will put them on the path to “re-engineering” their retirement.
“When you are in a dire situation, a key rule of thumb is to make sure you protect your own needs so you can continue to have the capacity to help others,” says Jim Johnson, vice president of advanced programs at Allianz. “Like when you’re on an airplane: the announcement says to put on your oxygen mask before assisting fellow travelers.”
Separating Emotion from Finance
Americans value family more than wealth, according to the Age Wave study, but during times of crisis like a recession, these values can seem to collide. How do you help family members without throwing your savings into jeopardy? Members of the Sandwich Generation experience this dilemma to a greater degree given the weight of their financial decisions.
Allianz recommends working with a financial professional on the following value-based questions to create a viable retirement planning strategy and arrange priorities.
Traditional
- How much do you have saved for your children’s education?
- How much money will you have when you retire? How much will you need?
- How do you feel about risk in retirement?
- What is long term care insurance and when does it make sense?
Preferred
- How important is it that you be able to help your children with their college costs?
- Do you know what your basic survival needs and desired or dream income needs will be in retirement?
- Do you have retirement strategies for both up and down markets?
- Have your parents ever needed assisted living care?
Magnitude vs. Chronology
Another important element of planning for retirement while meeting current responsibilities is balancing timing with overall magnitude. Simply because some concerns arise before others, they are given more consideration – and money – than others that have greater long-term consequences. For example, some parents place a higher value on the children’s college tuition than they do on their own retirement needs.
“For solid future financial health, it is important to focus on the magnitude of the problem rather than on the chronological order of the issue. The commitment to the long-term livelihood of yourself and your spouse outweighs nearer-term nice-to-haves,” says Johnson. “In a recession, you need to take a tough look at what is necessary in the long run versus what you may want to do right now.”
Schedule a Meeting with Your Financial Professional
To help identify issues before they become major problems, schedule a policy review with your financial professional and employ the ‘Three Rs’ of planning for retirement:
- Realign the way you think about retirement.
- Redefine the importance and value of retirement income strategies.
- Re-engineer income sources to help meet retirement goals and needs.
Source: Allianz Life Insurance Company of North America