Retirement Saving: Steps for the Sandwich Generation

Saving for retirement for the sandwich generation

Image: Dreamstime

Maybe you’re one of those people who has two major responsibilities right now – your kids and your aging parents. Of course, your folks can probably depend on Social Security and their personal retirement funds for a little while longer, but your children are wholly defenseless. At the same time, you have to start seriously considering your own future savings. What do you do? How do you save when you’re being pulled in several different directions at the same time?

Refinance Your Mortgage

You’re probably sick of debt by now, but debt can actually buy you a lot of time. Your mortgage is probably your biggest loan and one that you can stretch out for many years. By using a 30-year loan, and refinancing it every few years, you can dramatically lower your mortgage payment immediately and over time.

Why is this important? Because the savings you realize can be put into a retirement plan or your child’s college fund.

Use Tax Planning Effectively

Even if you have a big box place like Liberty Tax to file for you during tax season, it pays to start your tax planning a year in advance. You might need to meet with a financial adviser for this, but rebalancing your retirement accounts, and shifting investments around, can make a huge impact on the amount of tax you pay this year and going forward into future years.

For example, if you’re just getting started in your 401(k) at work, or you have an IRA, you might be able to shift some of that money toward an individual Roth account – diversifying your tax burden and hedging against potentially higher taxes in the future.

Think Outside of Retirement Accounts

You don’t always need a retirement account to plan for retirement. Sure it’s cool and trendy to use 401(k)s and IRAs these days, but those are government tax favors that can change at any time. Private insurance contracts, on the other hand, don’t change. Annuities and life insurance can help you diversify your retirement portfolio while providing much-needed insurance that you can use to help pay for your child’s education before you actually retire.

Specifically, whole life and universal life insurance builds a cash value that you may use to pay for some or all of your child’s education costs.

Make Intelligent Use Of Life Insurance

A little-known provision in almost all permanent insurance policies is a critical, chronic, and terminal illness rider. A rider is a modification to the basic contract. In this case, the rider allows you to gain access to the death benefit prior to your death to pay for long-term care services – including nursing home care.

How does this benefit you? If you take out a life policy on your parents, maintain ownership over the policy, and pay the premium, you may guard yourself against unexpected future medical costs. That’s because over 70 percent of Americans over age 65 will need some type of long-term care services according to the U.S. Department of Health and Human Services. In that light, life insurance can protect you from having to shoulder at least some of the costs of long-term care for your parents without shelling out the big bucks for a full-fledged long-term care policy.

At the same time, if your parents never need long-term care services, the benefits of the policy (i.e. the cash value) are yours to keep and use to supplement your other retirement income.


Jeremy S. is a proud member of the sandwich generation. An avid blogger, you can find his informative articles on various Internet blog sites.


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