Sandwich Generation: Tips for 'Club Sandwichers'
Devising financial principles for the entire family is essential when you have responsibilities for your parents, kids and grandkids
Jeff Brown has nearly 20 years experience as a personal finance columnist for publications including The New York Times, The Nightly Business Report on PBS, The Philadelphia Inquirer and MSNBC.com.
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Now that I’ve written three posts for Next Avenue and Nightly Business Report on the subject, you're probably familiar with the definition of “sandwich generation”: adults with financial responsibilities for their parents as well as their children. But are you also aware of the sub-category: the club sandwich generation?
The club sandwich generation typically means people in their 50s or 60s who are juggling their own financial needs with those of their parents, their grown children and their grandchildren — four generations instead of three.
An Extra Layer of Money Issues
Club sandwichers have a whole other layer of money issues to contend with.
(MORE: Grandparents Can Be More Than Just a Babysitter)
Just imagine you’re a 50-something desperately trying to save for retirement when your parents call for help with their medical bills, your grown son announces he needs assistance for a down payment on a home and your daughter’s kids need braces, an expense that wasn’t in her budget.
Do you raid your retirement accounts, look for a second job or just tell your loved ones they’re on their own? That’s what it means to be squeezed inside a club sandwich.
Obviously, there’s no one-size-fits-all approach for every member of the club sandwich generation. Nor can a family create a rigid financial plan for all four generations; there are just too many uncertainties and surprises along the way.
So I suggest that you, your parents and your adult children come up with guiding principles tailored to your family’s unique issues. Whether to do this in a letter to all your family members, a formal sit-down meeting or a series of casual conversation ... well, that’s up to you.
Questions to Create Guiding Principles
These are a few key questions members of the club-sandwich generation should try to answer:
How well can each adult generation manage on its own financially? This sets the baseline, with the answer exposing the issues that may require you to pitch in to help another family member.
What are the family’s basic financial assumptions? For example, what annual investment returns do each of you expect to earn? How much will every one of your family's generations be able to save each year? What will be everyone’s big expenses, such as college, retirement and home purchases? Does everyone have enough in emergency savings for unexpected situations? (Answering these questions will help you all see whether shortfalls are likely.)
How much can each generation contribute financially to the others? Will the grandparents pass down money for college to the grandchildren? Will your adult children and perhaps their children help you and your parents pay for nursing home bills, if necessary?
What non-financial contributions can each generation make? Whether it’s mowing lawns, driving relatives to the airport or washing windows, helping hands can save substantial sums over time by eliminating the need to hire professionals.
(MORE: The High Cost of Being a Grandparent)
Is everyone operating at peak economic efficiency? Lots of savings can be found in annual reviews of insurance policies, cell phone and cable plans and other ongoing expenses. Cutting back on these things is relatively painless — and only fair — if you’re depending on others or they’re counting on you.
How will the family minimize ugly surprises? A sense of cooperation can fray quickly if family members don’t get a heads-up as problems approach, like the prospect that someone will fall behind on the mortgage or miss a tuition payment.
Is everyone getting all the help available from that extended family member: Uncle Sam? The government might lend a hand through some tax breaks, for instance. You may be able to claim your grandparents, children or grandchildren as dependents on your tax return. (Check out the Next Avenue articles “How to Claim Tax Breaks for Supporting Your Parents” and “Can You Claim Your Adult Children on Your Taxes?”)
Is sound advice flowing freely? The bigger the family, the more likely someone has expertise or wisdom that others lack. Anyone who needs advice should ask for it.
Find a Degree of Mutual Reliance
The underlying theme: Try to see all the generations as a unit, with everyone responsible to some extent for everyone else. It isn’t necessary to become the Swiss Family Robinson; just try to find a degree of mutual reliance that every generation will accept.
No plan can address all the unknowns, of course. Who will lose a job or get an unexpected promotion? Who will die young or live longer than expected? Who will stay childless and who will have triplets? Who will decide to go to grad school and who will drop out before senior year of college?
But establishing a few guiding principles early on can help keep your club sandwich from falling apart.