According to the US Census Bureau, the average life expectancy is 78 years. In addition, the Families and Work Institute reported 75% of the fifty and over crowd expect to work during retirement. Couple these retirement statistics with the significant increase of generations living together, known today as the Sandwich Generation, and the necessity for retirement planning becomes even more momentous.
The lengthy and difficult economic downturn resulted in our own financially ill-equipped family lifestyle. Add to the family senior generations who relied solely on the government for a retirement plan, and an additional layer of financial burden results. I can tell you unequivocally, becoming an unforeseeable active member of the “Sandwich Generation” is financially and emotionally brutal!
Charles R. Pierret, Director of Longitudinal Surveys, Office of Employment and Unemployment Statistics, Bureau of Labor Statistics wrote of women caring for parents and children, “The term “sandwich generation” has become increasingly common in the United Statesover the last two decades. In a collective sense, the term has been used to describe the middle-aged generation who have elderly parents and dependent children. In the individual sense, the term describes people who are squeezed between the simultaneous demands of caring for their aging parents and supporting their dependent children.” read the Sandwich Generation
Besides altering ones physical home, privacy, and personal time the added financial decisions and monetary demands also increase. After a fall and a lengthy stay in a skilled nursing facility, hubby and I became responsible for the continued full time care of my father. His lack of medical coverage and retirement planning has become our burden. Experiencing this brutal Sandwich Generation financial and emotional conundrum prompted the sharing of this retirement planning information.
A Family Features article quotes Lule Demmissie of TD Ameritrade, “Retirement today is, not surprisingly, being redefined for may people.” The advice stressing careful consideration in four key areas I found to be most insightful for those who may possibly be forced into the Sandwich Generation lifestyle.
Demmissie Retirement Planning Tips:
Focus on the key areas
Four areas that can directly influence a retirement plan – budget, resources, investments, and lifestyle:
- Lifestyle – Consider factors such as where you live, what hobbies will be pursued, and whether or not work will continue in some capacity.
- Budget – Make sure to have a clear understanding of expenses during retirement, from medical needs to the cost of housing and inflation.
- Resources – Determine where money will come from during retirement.
- Investments – Develop a plan that will try to make funds last throughout the retirement.
Utilize online resources
In addition to focusing on the key areas, there are a number of free online resources to help investors, including TD Ameritrade’s online retirement center.
Understand the benefits of a Roth IRA versus a Traditional IRA
It is also important to keep in mind that retirement accounts can lead to tax benefits, such as:
- Roth IRA – Affords the ability for tax-free growth and federal tax-free withdrawals (for those investors meeting IRS requirements, such as age).
- Traditional IRA – The ability to deduct contributions on your income taxes now and pay the taxes when you make qualified withdrawals in retirement. In the meantime, savers can benefit from tax-free growth in the account.
“While some may think they’re too young to begin planning for retirement, it’s actually never too soon,” advises Demmissie. “It can be difficult to understand the different plans, but there are many resources available to make the decision making process easier. It’s important to ensure that you are prepared for retirement, with the tools and knowledge to live the life you’ve worked for, and the ability to enjoy retirement when the time is right.”
My personal advice, do not end up a stunned and financially burdened member of the Sandwich Generation lifestyle. Plan, question, research, and evaluate a retirement plan today! Preach and teach the need and value to your children. Seeking professional help to decide which retirement plan will be right for you and yours. Most importantly, never ever think it can’t happen to you!!
Retirement Tips Provided by: TD Ameritrade, Inc. Member FINRA/SIPC /NFA
TD Ameritrade does not provide tax or legal advice. It is recommended that you consult with a tax advisor regarding your personal tax situation. Source: Ameritrade and Family Features #11078_AR
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