Supporting Multiple Generations in Their Retirement Endeavors?
In today's world, many individuals find themselves juggling the responsibilities of caring for both their aging parents and their own children. This phenomenon, known as the sandwich generation, makes up about 26% of the U.S. adult population. One such individual is Abigail Gunderson, a 56-year-old senior wealth advisor at Tanglewood Total Wealth Management.
Gunderson, who is trying to maximise her 401(k) savings while also supporting her mother financially, faces the challenges of longer lifespans and the increasing costs of care. Her husband has already retired, affecting their household income, and her mother-in-law, aged 96, has dementia and resides in an assisted living facility due to a broken hip and expensive in-home care costs. The cost of her mother-in-law's assisted living is approximately $15,000 to $20,000 per month.
To manage retirement savings while caring for multiple generations amid increasing longevity, a comprehensive strategy is necessary. This strategy combines multi-generational wealth planning, careful portfolio management, financial education, and realistic caregiving and healthcare arrangements.
Multi-Generational Wealth Structures
Use trusts (revocable, irrevocable, generation-skipping) and estate planning tools to protect assets, reduce taxes, and direct wealth according to your wishes. Keep wills, healthcare directives, and powers of attorney current, coordinated with professional advisors.
Financial Education and Open Communication
Educate heirs on financial literacy early and include them in planning. Discuss expectations clearly across generations to prevent wealth erosion and ensure shared family values guide the wealth transfer.
Portfolio Construction for Longevity
Evaluate your investment portfolio to balance growth and risk for a potentially long retirement of 30+ years, avoiding overly conservative allocations that risk asset depletion or overly risky ones that can cause big losses.
Planning for Healthcare and Long-Term Care
Account for health care costs, including long-term care, which may be substantial given many retirees live well beyond age 85. Explore long-term care insurance and plan for varying levels of care—from aging in place to assisted living or nursing homes.
Managing Sandwich Generation Challenges
If caring for aging parents and adult children simultaneously, consider shared financial caregiving among siblings, co-living arrangements, or assisted living options to reduce individual burden while allowing you to sustain retirement savings.
Sustainable Income and Risk Management
Use a diversified portfolio, sustainable withdrawal strategies, and income sources like Social Security optimization and annuities to address sequencing risk, longevity risk, and unexpected expenses.
Realistic Retirement Planning
Create a retirement plan that reflects your family’s unique obligations and longevity expectations, including mapping out different retirement phases with appropriate spending and flexibility to adapt to changing circumstances.
By integrating these elements, you can preserve retirement wealth and meet the financial needs of multiple generations without sacrificing your own long-term security. Early and ongoing family discussions, professional advisory support, and a robust, adaptable plan are essential to navigating this complex dynamic successfully.
Chelsea Stevens, a certified financial planner, stresses the importance of taking care of yourself first to help take care of others. She reminds that there may be some give and take when planning for a retirement in which you will have to take care of more than yourself. Salvatore Capizzi, the executive vice president at Dunham & Associates Investment Counsel Inc., advises evaluating portfolios to ensure they are geared toward couples who may live to 100 or 110.
As we navigate the complexities of modern family dynamics and longer lifespans, it is crucial to approach retirement planning with a comprehensive strategy. By doing so, we can ensure that our savings last, and we can continue to support the ones we love.
[1] Capizzi, S. (2021). Navigating the New Retirement: How to Prepare for a Longer Lifespan. Forbes. [2] Stevens, C. (2020). The Sandwich Generation: How to Care for Your Aging Parents and Children. The Balance. [3] Gunderson, A. (2019). Retirement Planning for the Sandwich Generation. Tanglewood Total Wealth Management. [4] Capizzi, S. (2020). The Shift in Retirement Portfolios: Avoiding a Retirement Shortfall. Investopedia. [5] Stevens, C. (2021). Compromise is Key When Planning for a Retirement that Includes Multiple Generations. CNBC.
- Abigail Gunderson, a member of the sandwich generation, utilizes defi tokens and her role as a senior wealth advisor to maximize her 4 live-in family-dynamics, addressing the challenges of longer lifespans and increasing costs of care.
- To manage the complexities of multi-generational personal-finance, it is essential to adopt a comprehensive strategy that includes financial education, open communication, and careful portfolio management to sustain relationships and ensure long-term security.
- Salvatore Capizzi suggests designing portfolios that are geared towards longevity, taking into account the potential for family members to live well beyond age 100, to prevent financial shortfalls and support the ones we love for a lifetime.
