If you were to do a search of the most recent financial news, you’d probably see articles talking about slow job growth, student debt, and the housing market. One thing you probably won’t see: articles about “the sandwich generation”.
The sandwich generation is comprised of people between the age of 30 and 60 who have children and are also taking care of their elderly parents. As if that weren’t hard enough, they often still have their own student debt and are in the age range which is at the highest risk of default. This is potentially disastrous for their finances and we may just be starting to see the effects of it. So what should we do? Start more conversations about what can be done to help them now! And if you’re in this generation, read on for tips to help you through.
A Day in the Life of the Sandwich Generation
If you’re a parent, then your morning probably starts something like this: you wake up wishing you had a few more hours of sleep, wake your equally groggy kids up to get them ready for school, and make sure they’re dressed and have homework in their backpacks and food in their bellies…then finally get ready for your day. Maybe that means a commute to work, shuffling to your home office, or beginning a long day of home and school duties of a stay at home parent.
Before noon you’ve probably already put out three proverbial fires and there are still hours left to your day. While you’re taking care of your day’s work, you have little time to think about yourself because you’re worried if your little one is going to do well on his test and now you also realized that the bill for your mother’s assisted living center is due. Or perhaps your mother or father lives at home with you and needs to be taken to the doctor. That could mean leaving work early to make sure everything for your parents is as taken care of as for your kids.
By dinnertime you’ve already served several meals, done a full day of work, and planned a budget that accounted for your kids, your own expenses, and your parents’ expenses. Needless to say you’re probably emotionally, mentally, and financially drained – and wondering how much more you can stretch before you just fall apart.
Taking Care of the Sandwich Generation
With all this time spent taking care of someone else, who’s taking care of you? Who’s making sure that your needs are met and your bills are paid? Probably just you, and maybe some of your peers. But it doesn’t have to be that way. Do you know others that are going through the same thing you are? Do you ever talk about it? There’s no reason to suffer alone! The more we talk about this, the more others will come out with their own stories. Then more solutions are sure to follow!
Until then, let’s talk about some things you can do to optimize your situation now. While there’s nothing I can do about adding more hours to the day (I wish!), there are small things you can do to optimize your finances. Here are a few:
1) Discover Low-Impact Ways to Pay Debt Off Faster
If you’re in the sandwich generation and dealing with debt on top of everything else, then removing this monkey from your back could be the key to saving your sanity – and finances. So how are you supposed to do that on a tight budget? Give biweekly payments a try.
Here’s how it works: rather than paying monthly payments on things like your mortgage and student loans, you would split your payment in half and pay every other week. If you’re getting paid biweekly, then this has no effect on your monthly budget, although it can take years off the life of your loans. If you want to run the numbers yourself, look up a biweekly payments calculator and see what effect it will have. Even if you don’t get paid biweekly, you can still set this up and save thousands of dollars with relatively low impact on your monthly budget.
If you’re looking for ways to pay off student loans in particular, be sure to look for federal programs that may help you. Our Student Loan Debt resource center can help you find out which programs would be a good fit.
2) Take Advantage of Tax Breaks
One good thing about taking care of many people outside of yourself is that the government wants to help you out for doing so. Not only can you claim tax deductions for having children as dependents, but there are also deductions if you’re paying for certain types of care for your parents. Bankrate lists some information on how to claim your parent as a dependent.
And don’t forget about the usual deductions, like the mortgage interest tax deduction and deductions for student loan debt. Even though it’s tedious to think about these every year, it’s well worth it because you can save you upwards of thousands of dollars a year
3) Avoid Skimping on Retirement at all Costs
This piece of advice could simultaneously be the most difficult to do and the most important to follow: do not skimp on your own retirement. And please, please do not borrow from retirement to pay for anything unless you are truly desperate. You only have so many years to save for retirement and they go by much faster than any of us realize.
Some people borrow from retirement – or refuse to prioritize retirement savings – because they think they will never stop working. That may be true – for someone who has entire control over their own life. But even if you want to work well into your golden years, that doesn’t mean your company, industry, or health will allow it. So it’s best to think about planning retirement as if you had no choice but to retire. Because, in all honesty, you might not have a choice.
Keep the Conversation Going
These steps to financial optimization for the sandwich generation are just the beginning. Like all problems that occur in our economy, the solving process doesn’t even begin until the problem is well-known and broadly discussed. So if you’re part of this generation, talk to your peers about what you’re going through! Together you can form a stronger band of people with the potential for making change. And if you’re not in the sandwich generation, look around. You may have loved ones, coworkers, or even friends who are. From a clearer outsider’s point of view, consider what could be done to help them. This problem cannot go on for much longer so let’s start problem solving with our friends, neighbors, local government, and non-profits now.
We are right smack in the middle of the sandwich generation – only our kids are 9 years apart so while one is still dependent on us, the other is married and has 2 kids. Add grand kids with health problems to the fray and a spouse’s health problems – that must be the “club sandwich” generation. Sometimes all you can do is keep on going. But your point to never short sell your retirement is very good advice. Tough to do, but very wise.