InvestmentNews: “Keeping the sandwich generation on track for retirement”
InvestmentNews, March 21, 2022 — “Many middle-aged Americans are bringing up their children while caring for aging parents, and placing their own retirement needs on the back burner,” explains Sean Allocca in today’s issue of InvestmentNews.
He points to research from the wealth management consulting firm Hearts & Wallets, which found the number of Gen Xers who are now very concerned about costs of caregiving hit 24% in 2020, up six percentage points from 2018.
“The study, released in January, conveyed just how large the need for managing the finances of aging loved ones is in the U.S., and showed how issues are compounded for wealthier households that have additional assets and more complex estate planning problems,” Sean writes, noting that with prices on the rise, sandwiched clients are now worried about saving for college and the health of aging relatives, leaving little time — or assets — to plan for retirements of their own.
The good news is that wealth managers can step in and provide much needed assistance, said Marguerita Cheng, chief executive of Blue Ocean Global Wealth in Gaithersburg, Maryland.
“It’s like a life vest, you have to take care of yourself first,” Cheng said about the necessity to plan for retirement before setting aside money for family members. “You can’t pour from an empty cup.”
A good place to start, she said, is a plan to pay for college. 529 plans are popular options, and with more than $438 billion in assets under management across approximately 15 million accounts nationwide last year, there were 92 savings plans and 12 prepaid plans available, according to research from AKF Consulting.
It’s also important to remember that while children have avenues to help pay for higher education, like choosing a less expensive in-state school or applying for need-based or merit-based scholarships, near-retirees have significantly fewer options.
“There’s never going to be financial aid for retirement,” Cheng said.