By the time many people have reached their 50’s, they’re expecting to have the freedom to perhaps travel more and focus on their career – and start putting more money away for retirement.
However, the reality for many younger baby boomers and Generation Xers is that they’re feeling the squeeze of being part of a so called sandwich generation.
It happens when you are juggling a career with kids after starting a family later in life, or have adult children still living at home, and the added stress of having ageing parents in need of greater care and attention.
Being wedged between the care of children and your own parents – which effectively means you’re supporting three generations – places a massive pressure on your finances.
It makes it difficult to pay off the mortgage and start saving for your retirement, let alone the immense emotional burden that rests on your shoulders, all while you’re still working and striving to reach your own goals.
While as parents most of us have a natural obligation to help care for family members when they need it, here are some ways to help you provide the greatest care for your children and parents, with less stress and without sacrificing your own retirement:
1. Look out for yourself
Feeling time poor and out of pocket isn’t unusual for members of the sandwich generation.
In fact, estimates show baby boomers are forking out $23 billion a year to assist elderly parents and adult children. And as far as time goes, they’re spending 109 hours helping their kids and 250 hours helping older relatives each year.
It’s really important, however, that you take time out for yourself and don’t lose track of your own goals. This generally means having your own budget and setting financial boundaries so you can continue to save and invest for your own future. If you need help managing your finances, seek advice from a financial planner.
2. Don’t dip into your super and keep saving
There are a number of incentives provided by the super system to help you boost your super savings and potentially save tax at the same time, so it’s important to make sure you’re taking advantage of them. Salary sacrifice can be an effective way to reduce your income tax and boost your super balance. Also consider spouse super contributions – if your partner’s income is higher than yours, it might be worth them contributing to super on your behalf, or vice versa.
3. Get a helping hand for your parents
There are many government agencies which can help out with the day to day care of your parents if they’re living on their own – showering, cleaning, washing, shopping. Local councils also offer help with gardening services and transport to local shopping and community centres. Engaging these home-care services for mum and dad doesn’t mean you love them less, it just means you won’t be as tied down on weekdays.
4. Find out your Centrelink entitlements
Depending on the level of care being provided for your parents, you can apply to Centrelink for a Carer’s Allowance – the maximum amount payable is $124.70 per fortnight. This payment could, for instance, help cover your petrol costs each week to taxi family members around.
5. Talk openly about aged care
Discuss your parents’ estate planning wishes with them and other family members, and should they need full-time care, try to plan for this as early as possible to ease the financial and emotional pressures later.
6. Make sure the ‘kids’ are chipping in at home
It might be a parent’s dream to have their kids still living at home well into their 20’s, but it’s financially demanding. In fact, an AMP.NATSEM Income and Wealth report on the Cost of Kids proved this, revealing that if you have an 18-24 year old at home you’ll be shelling out a staggering $678 per week. It’s therefore quite reasonable to expect them to contribute to household expenses by paying regular board. It’s also acceptable to ask them to cover the cost of their own car and petrol, outings and clothes. Even if they’re still studying and only working part-time, they should be as financially independent as possible. And assign them to small regular domestic tasks at home, or ask them to help out with the care of their grandparents and take the load off yourself.
7. Encourage older kids to save
Your dependent children aren’t too old for you to insist they have a savings plan with targets so they can ultimately become financially independent and leave the family nest. If they’re spending all their money on a brand new car, designer clothes and dining out, chances are they’ll be no closer to moving out in five years’ time! A smart bank account is a good way to take the hard work out of managing your money and may help them stay on top of your finances.
About the author:
Jenny Cattach is an authorised representative of AMP Financial Planning. Any advice given is general only and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situation and needs.