Sometimes I Feel Like a Piece of Bologna

Sunday, October 22, 2006

Strategies for the "Sandwich Generation"

Karyn McCormack, in an article for, offers several strategies for the Gen Sandwichers.

She notes that the costs for the Gen Sandwichers can add up, even if your parents have saved for their own future care. The reality is, their generation is living longer—many into their 90s--thanks to better health care, and the cost for that care is rising.

McCormack notes that the average cost for a nursing home stay in 2005 was $64,000 a year—or about $176 per day—for a semi-private room. In my step dad’s case, the cost was $205 per day, plus lots of extras—and he doesn’t live in an urban area.

About the time Gen Sandwichers are coughing up an average of $21,235 for college tuition (per child), they’re also losing money as they take time away from work to care for their aging parents. “On average, 18 hours a week are devoted to care,” says Patti Brennan, president of Key Financial, a financial planning firm in West Chester, Pa.

McCormack points out that many caregivers, who tend to be women, must either leave their full-time jobs or work part time and give up important benefits. They might also turn down promotions and the higher salary that comes with them because they can't devote the necessary time for additional work responsibilities.

According to Brennan, “On average, care costs an estimated $659,000 during a person's lifetime in reduced salary, lower 401(k) contribution, and lost retirement and health benefits.”

Elder care can take a psychological and emotional toll, because not all siblings and family members will agree on how to take care of a parent, who will be the primary caregiver, and who will pay for it.

To avoid disaster, McCormak says that caregivers need to get their own finances and retirement plan in order. Especially when children are in the mix, caregivers must set priorities and have open communication with their entire family to figure out ways to share the financial, emotional, and time burdens.

Her article discusses seven tips to cope with being sandwiched:

1. Don't dip into your retirement savings.

2. Start a college savings plan for your children.

3. Make sure your parents have long-term care insurance.

4. Establish a durable power of attorney, a health-care directive, and update wills.

5. Take inventory of your parents' assets and consolidate accounts.

6. Seek help from social services and elder law attorneys.

7. Continue saving despite family obligations and control debt.

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