Finance

Taking care of your children, working full time and caring for an elderly parent may seem overwhelming, but today that’s what many Americans are facing. Matters can become further complicated when financial resources are tight. Experts suggest that early financial planning can help avoid the stress you may experience if you become a member of the “Sandwich Generation” — the growing population of Baby Boomers who are responsible for the care of their children and aging parents at the same time.

According to a national long-term care survey by the Administration on Aging, more than seven million people act as caregivers for an elderly or ill family member or friend. If you think you may face this in the future, now is the time to start planning for it.

Following are four basic steps people can take to prepare for this situation:

Start an Emergency Fund — Plan ahead for unexpected expenses, such as medical emergencies, home healthcare, or time away from work to stay with your loved one. In most cases, this type of assistance can be expensive. Whether you hire a home healthcare provider or take on the role yourself, have at least three months of income set aside to cover any expenses. (Some workers are covered by the Family Medical Leave Act, which allows up to 12 weeks of unpaid leave to care for an ill family member.)

Start Saving Now for Your Child’s Future — Saving for college is a top priority for many parents, but only half are saving regularly, according to a survey conducted by Fidelity Investments. Getting an early start can help parents significantly improve their chances of building the savings they need to pay for their children’s college while alleviating the need to save larger amounts later or during a financially difficult time.

Protect Your Family by Having Enough Life Insurance — Covering your family’s expenses in the event that something happens to you is a concern for most people, yet many Americans don’t have enough life insurance coverage. If you’re a member of the Sandwich Generation, the need for life insurance becomes even greater. Term life is one of the least costly forms of life insurance and has become even more affordable through plans that offer lower rates for those who have maintained a healthy lifestyle. Term life allows you to pay a set premium for a pre-determined number of years and can be particularly attractive if you have a limited income, or want to ensure that a specific financial obligation can be met in a cost-effective way.

Don’t Miss Out On Your Own Retirement — The Employee Benefits Research Institute (EBRI) says that for the past three years the percentage of working Americans who are very confident that they will have enough money to live comfortably throughout retirement stands at a mere 20 to 25 percent. You can avoid coming up short in your golden years by estimating how much money you’ll need in retirement, maximizing tax deferred savings plans such as your 401(k) or individual retirement accounts (IRA), and looking at supplemental retirement savings options such as annuities.

While the pressures of caring for children and elderly parents at the same time can force many people to restructure their lifestyle, it doesn’t have to force them to sacrifice their long-term savings goals. Engaging in careful preparation can help minimize the stress of being squeezed at both ends.

Stephen Tradd is vice president and branch manager of Fidelity Investments’ Naples Investor Center, a multi-service discount brokerage operation.