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The Sandwich Generation

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Updated: May 3, 2013 12:14PM

Life is taking a big bite out of the "Sandwich Generation." If you're a boomer, it's more likely than ever that you're helping with the care of both your aging parents and your adult children. You're the "meat" in the middle of the sandwich -- and the center is getting thin.

A new survey done by Zogby International for Generation Mortgage (a reverse mortgage company) shows that baby boomers are among the hardest hit by this recession. Nearly half of those polled had either lost a job or taken a cut in pay or benefits in the past two years. As a result, 17 percent had been unable to make a mortgage or rent payment on time.

Yet, if you're the boomer in your family, you're the one everyone looks to for help. Your adult kids, graduating from college with huge student loan debt and few job prospects, are moving back in. They may collide with a grandparent who reluctantly moved into your home when their money ran out, or they needed some care and assistance.

Finally, the boomer generation has found a use for that huge house on which they overspent a decade ago. Now if they can only keep up with the mortgage!

This is a tough position for American families that planned for a different lifestyle. But it is not without precedent. A hundred years ago it was common for three generations to live under one roof -- an old lifestyle that may be forced into a comeback.

But 100 years ago, Americans did not have to plan for a 25-year period of retirement. People worked harder at physical labor, wore out faster, and didn't have modern medicine (with all its costs) to help them live longer.

So the question for the Sandwich Generation is how to manage this squeeze. It's no longer a cute term designed to make you smile. Now the recession is taking a big bite.


Face reality

The hardest advice to take is the most basic. You need to face up to the reality of your position -- and the fact that it might not be temporary. That is, you might be helping your parents for the rest of their lives, and it might be a while until your adult kids find a job. Change your time horizon.

Make a plan -- and share it

It does no good to pretend that things are really the same, for anyone in this sandwich. A family discussion is required -- but first you need to make your own financial plan, since you're presumably the ones with the money and the assets, which is why everyone thinks you can fix things.

Create priorities

The Zogby poll shows that 73 percent of the Sandwich Generation have cut back on entertainment and eating out, while 43 percent have decreased overall spending on basic groceries. For sure, your everyday lifestyle will change when you take on the responsibility of another generation. But you must take an honest look at whose needs come first.

Top priority -- yourself

Keeping your own ship afloat is the top priority, without which and despite all your good intentions, you can't help anyone else. So you need to make a household budget allowing everyone to share the burden. Adult kids can and should pay some room and board. Grandma will certainly share her Social Security check. It's like the airlines' announcement: Put on your face mask first, before helping others.

Aging parents

Be sure to check into available programs in your community that can help your elderly parents -- if not financially, at least by giving them some resources to spend time with others of their generation in an elder day care program. You're not doing Grandpa any favors by letting him go to his room and watch TV.

Your children

Sorry, but your priorities have turned upside down -- and your kids are not likely to understand. You've spent your life putting them first, making sure they got to college. Now they have student loans and no jobs. (Read this coming Thursday's column for some solutions to that problem.) But this is their problem to solve -- and the most you can offer is a roof over their head until they figure out how to move out. Never dig into your own retirement funds, or take out a mortgage loan, to repay your kids' student loans.

Have a family discussion

There's no reason for you to be the only one worried about your finances. After you've sorted out your priorities and taken a realistic look at the available money, sit down at the kitchen table and share your worries -- and your hopes. With everyone aware of the reality, you might be surprised at the solutions they contribute. We've become so insular that these tough times might teach us the value of inter-generational living.

It's tough running a three-generation household, especially when you're financially squeezed. Community agencies report that the number of people using food pantries has more than doubled. Older people must choose between food and medicines. Swallow your pride and ask for help.

And if you're one of those fortunate Americans who have job security, have parents who saved enough, and kids who got the good jobs, reach out to someone else in your family or neighborhood who is on the edge. You won't have to look far if you open your eyes.

And even showing your concern in a small way will be a big help -- dropping off a basket of groceries, offering to drive a senior to a doctor's appointment, or giving a low-paying entry job at your company to a neighbor's struggling graduate.

There is no doubt that we are in the toughest times since the Great Depression. But our grandparents and great-grandparents made it through. And we will too. That's the Savage Truth.

Terry Savage is a registered investment adviser and a co-host of ''Monsters and Money in the Morning'' on WBBM-Channel 2 from 5 to 7 a.m. weekdays.

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