The Sandwich Generation, Part I: Protecting Your Parents’ Financial Future

By J. Bryan Allee – EVP & Chief Fiduciary Officer

The Pew Research Center states that roughly a quarter of all adults in America are in the “sandwich generation” – with a parent 65 years or older and either raising one child younger than 18 or providing financial support to an adult child. Many adults in their 40s and 50s are facing the pressures of not only providing for retirement for themselves, but also attempting to help with their older parents and their young adult children.

In this two-part series, we will outline helpful strategies “sandwich-ers” can utilize when providing assistance and guidance to those they care about, while also balancing and protecting their own financial nest eggs in the process.

First, we look at the challenges of providing financial help to older adults. Sadly, with the social and technological changes of today, financial fraud and the effects of cognitive decline create unique challenges for older adults trying to protect their retirement savings from avoidable loss. Often, “sandwich-ers” are either called upon to help their parents, or worse yet, hear nothing from them… until it’s too late. The closeness of older parents and children can sometimes help the planning process needed to factor in safeguards against undesired events. But other times, that very closeness makes it hard for both sides to agree on what those safeguards should be. And then, there is the problem of maintaining the kind of monitoring necessary over the long term to ensure that whatever plan is devised keeps working for the older adult.

Most experts agree that there are three fundamental parts of any plan to help protect the finances of older adults who may become vulnerable to fraud and loss – talk, plan, and review.

TALK: “Sandwich-ers” need to find ways to start a conversation with their parents about their finances.

Usually, sooner is better than later. Ensure that you know who the “gatekeepers” are for the various parts of the parent’s financial life. Is it another child? A friend? A stranger? Try to be as comprehensive as possible – look at not just investments but the parents’ spending, saving, and giving habits. Try to emphasize that this is not a matter of “taking over” their finances, but rather as part of a total attitude of caring for them and doing what’s best for them. Often, a certified financial planner (CFP®) or neutral attorney or accountant can help provide support to “sandwich-ers” trying to help move the conversation in a positive way.

PLAN: Review the current plan for the older adult (or if there isn’t one, create it!) and make sure it is consistently reviewed to ensure it continues to work for the parent.

Many experts agree that it is important to create a balance in a plan between making positive changes where needed in investing and spending, while at the same time avoiding too much change, which can create confusion and concern with the older adult. Also, it is imperative to have plans in place for crisis situations – especially with serious, sudden events like heart attacks or strokes that render the adult unable to act at all, or the death of the parent. Planning allows a “sandwich-er” to take the reins when necessary to ensure the parent is cared for and protected until the end comes.

REVIEW: As much as possible, “sandwich-ers” need to find ways to review financial records for older adults to ensure they are not falling prey to potential fraud.

This will require a large amount of trust – and often, that trust can only develop over time. Although it may make it more time-consuming for “sandwich-ers,” keeping the older adult involved and part of the review process can help build that trust and provide more confidence that it is working for the good of the parent. Account monitoring services, automatic bill payments and shredding financial documents can also be key ingredients in the review process and make it work more efficiently.

Next time, we’ll discuss how “sandwich-ers” can help the “other side” of the sandwich for the younger generation in need of financial planning and advice. Always feel free to consult with your financial planning professionals at Central Trust Company for help in this difficult but vital part of caring for your older loved ones and their financial futures.