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Often called the sandwich generation, children of baby boomers tend
to be financially strapped, funding their children's college
educations, their own retirements and their parents’ lifestyles at
an age when health care costs can increase dramatically. "The
stresses are real, but families from all backgrounds can get through
the period of college tuition payments, retirement finances and
caring for aging parents with a little planning, diligent saving and
knowledge of their financial situation," says Tara Reynolds,
corporate vice president with Massachusetts Mutual Life Insurance
Co., known as MassMutual. "The most important thing families can do
is to evaluate their present financial situation honestly with a
trusted financial professional."
Jeff Duncan, a MassMutual agent based in New Jersey, notes there
is not a one-size-fits-all solution.
"This is a challenging place to be for many baby boomers. By
understanding each family's unique needs, there are various ways to
solve for the best outcome," he says.
Here are some tips to get your family conversation started and on
a workable path:
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Be open with your
parents and children about your financial situation. Understand
what retirement provisions your parents have made, what you have
in place and areas where gaps might occur. Consult a financial
professional to help with this gathering and analysis of
information.
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Costs for long-term care services and
health care in general are growing. The national annual average
cost of nursing home care was $82,125 in 2010, according to the
American Association of Long-Term Care Insurance. Anticipate a
yearly 3 percent inflation increase in these costs, which would
bring the average annual nursing home cost to almost $300,000 in
30 years.
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Don't leave your
retirement plans to fall by the wayside. Shirking retirement
planning now could leave a burden on your children to care for
you later in life. Contribute at least the amount your company
will match in your 401(k) plan, and work with a financial
professional on other avenues you are able to take for
retirement savings.
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For your
children's college funds, set up a 529 plan to help absorb some
of the cost of their education -- which is now running close to
$40,000 a year, on average, for a four-year degree. Also, talk
with your children openly about scholarships and loans and how
they can help handle costs for their education. A compromise
might be having them enroll in a two-year or community college
and live at home to help cut costs.
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Establish a
long-term insurance plan for yourself. Set up life insurance to
protect your family in the event you die prematurely, and
disability insurance to protect your income should you become
too ill or injured to work. Also, consider establishing a
long-term insurance plan -- either as a stand-alone product or
as a rider to a life insurance policy -- to cover the long-term
care needs of yourself, your spouse and your parents.
The sandwich generation tends to be bombarded with financial
demands from all directions, but the children of baby boomers don't
have to put their retirement planning on hold. Following these tips
can help you avoid the stress that can result by failing to plan.
[Brandpoint] |
