Rising prices, fewer financial savings: How the pandemic hits the "sandwich era"
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Raising your children and caring for your aging parents at the same time is not easy. The pandemic made it harder.
Known as the "sandwich generation," Americans who support children, parents and themselves face skyrocketing costs and a slump in their savings, according to a new report from New York Life.
More than half [54%] of respondents said they had been spending more on care each month since the crisis began, with 23% saying an additional $ 200 or more per month.
"Higher costs have led to cuts elsewhere: members of the sandwich generation report contributing less to their savings and retirement, raiding emergency funds, paying off fewer debts and delaying bills," said Dylan Huang, senior vice president and Head of Retail Annuities, Investment Solutions and Wealth Planning for New York Life.
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On average, they spend about $ 1,000 a month looking after an aging relative. Nearly 70% use money from their daily budget to pay for it, 40% less contribute to their savings, and 30% save less for retirement, the report says.
There has also been a shift in demographics, accelerated by the pandemic. Covid-19 played an important role in the decision to provide care for an aging relative for 26% of respondents. Half of those surveyed, 52%, said the pandemic played a role.
As a result, the sandwich generation has become younger, more feminine and more diverse, according to the paper.
Forty percent of millennials were more likely to care for an aging parent during Covid-19 than they were before the pandemic, compared with 34 percent of Gen Xers and 13 percent of baby boomers. New York Life defined millennials as born between 1981 and 1996, Gen Xers as 1965 to 1980, and baby boomers as 1946 to 1964.
"For the sandwich generation millennials, it is critical to develop a financial strategy that can be reconciled 'now' with 'in the future'," said Huang.
For Gen X members, checking into retirement plans is vital as they have less time to catch up and may have to postpone retirement, he said.
It's also important to consider long-term care insurance, powers of attorney, and medical guidelines, added certified financial planner Tyler Huck, a financial advisor with Atlanta-based oXYGen Financial.
If you or your family haven't saved money on long-term care, consider getting LTC insurance. While traditional policies are expensive, there are life insurance plans that also offer long-term care.
"It's wise to set this up for your parents, or even yourself, to keep your kids from being in the same boat," he said.
Image source: DNY59 | E + | Getty Images
In the meantime, a permanent power of attorney as your parents' caretaker gives you legal authority to make decisions for them if they become incapacitated, and a health care authority allows you to make their medical decisions.
Your parents can express their desire for medical treatment in a living will, also known as an extended policy.
"These elements are essential parts of a financial plan," said Huck.
In the end, it comes down to finding a balance between your caring responsibilities and your age goals.
"By securing your own financial future … you can provide better care for yourself and your loved ones and incorporate all the important elements of a protection-first financial strategy," said Huang.
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