Can You Retire While Living Life in the Sandwich Generation?

The Squeeze

• The Sandwich Generation faces a unique financial challenge as they save for retirement, take care of children and help aging parents — all at the same time.
• Since your retirement depends on your whole family’s financial wellness, your parents’ care and your child’s college costs will affect how much you can put away. 
• Creating a family inventory of assets and debts can help you clarify how to save money to meet everyone's needs. 

Generation X is known for being fiercely independent and having the ability to straddle two different worlds; the pre-internet age of analog amusement and the tech-savvy world that plasters screens everywhere. 

Now as this generation looks forward to retirement, many Gen X'ers are worried that no matter how adept at hustling and multitasking they become, it still won’t be enough to stop the crushing financial weight of supporting aging parents and caring for their kids at the same time.

If you’re feeling stressed, you’re not alone. According to Pew Research, the financial readiness of GenX'ers to retire comfortably might be shaky at best. For those sandwiched between funding aging parents and children, only 28 percent report feeling that they live comfortably. Also worrisome: 30 percent report experiencing challenges meeting their financial needs, with 11 percent say they cannot meet their most basic needs and may need financial help themselves when they reach retirement age. 

So can GenX ever retire? We say yes. In fact, with a few clever financial strategies and one deep breath, we believe you can put to rest at least some of the anxiety around family financial planning. 

Assess your family’s needs and set expectations clearly

The first step to making a plan for retirement is to grab a pen and paper. Now is the time to take a realistic view of what your financial obligations are and will be. As you map out your family holdings, consider where you can downsize to save money.

To this end, having honest conversations with your parents about their long-term care needs can help you prevent unexpected financial surprises. Similarly, now is a good time to begin considering what kind of financial support you’ll be able to provide for your children as they fly the coop (and possibly fly back). 

As you determine your own needs and wants, consider going line-by-line as a family to identify all assets. A few questions to consider:

• Do you own real estate?
• Do you plan on having recurring incomes from a pension, Social Security, or another source?
• Do you own stocks or other investments?
• What debts exist?

Lastly, no one wants to talk about end-of-life care or what happens after someone passes, but the reality is that if those details get laid out early on, it can save families heartache, time, and General Hospital-style drama. A few key documents to prepare with your aging parents include:

• Wills and trusts and selecting an executor
• Medical directives
• Funeral plans
• Powers of attorney

Get real about the monthly budget and start saving

If you haven't already, it is time to set a monthly budget and find ways to save. You’ll want to start investing in yourself to get ready for retirement. Here are some ideas to consider:

• Pay yourself first. Before you pay your student loans and mortgage, set aside an automatic amount that goes directly into your savings account.
• Identify areas in your monthly spending that you can cut or reduce. Sure, we've heard all about how avocado toast adds up, but what about things like online monthly subscriptions or annual memberships that you might not use?
• Consider buying life and long-term insurance to protect your family if something happens to you.
• Hire professional help to create a financial retirement plan that fits the unique needs of your family situation. A retirement advisor can help you identify ways to save and grow your savings, taking the stress out of thinking about the future. 

Get creative on paying for college

The question of paying for your kid’s college or saving for retirement is a dilemma we have considered many times. If college is looming, your retirement may not seem like the top priority.  But there are ways to manage the costs. Develop a realistic list of target schools that offer grants, loans, work-study and scholarships. State schools are less expensive than private schools and if your child can live at home instead of on-campus, this can save thousands of dollars each year as well. 

If you are able to put aside a bit for college even as you save for retirement, consider these three popular strategies that savvy parents use:

• A 529 College savings plan is an excellent choice because it offers a tax-deferred savings option, and in some cases (read the fine print), you can even use the savings tax-free. 
• Roth IRA is another popular method of savings, but fair warning: this tax-free return on contributions can ultimately impact how much student aid your child will get from their financial aid package, typically determined by the FAFSA form.
• Savings bonds are a safe bet, but they take a long time, so start buying these early. Some bonds offer tax-free interest if it is used to save for college. 

Planning for retirement, especially as a member of the sandwich generation, can feel like a never-ending chore. But by breaking things down into small, actionable steps, you will likely be surprised by how much control you can take over your financial future. 

Where to start? Precisely where you are right now and you’ll build a road to retirement that works for you.