"Sandwich Generation" In Financial Bind

A growing number of adults find themselves "sandwiched" between the needs of their kids and their aging parents, and squeezed financially and emotionally from both ends.

Radio host and financial author Dave Ramsey has received lots of pleas for advice on that topic and, on The Early Show Tuesday, he provided lots of insight.

Ramsey has one general piece of advice for anyone caring for young children and aging parents: "Only the strong can help the weak, so your first goal must be to get yourself financially under control."

Lots of people get behind in their own bills as they struggle to help their parents, he says. But you need to keep your home on a strong foundation; you can't help anyone else if you're hurting yourself. Get and stay financially strong. You're the goose, and if you kill the goose, there will be no more golden eggs. Taking care of your financial needs first is not selfish, it's smart.

LETTER 1
Benny from Texas writes: "S.O.S! I have unexpectedly had to place both my parents in a nursing home. They have been in denial for years, and have always insisted that they were going to "stay home until they die." They refused to discuss or plan for anything else. Help! I need info on how to make their money work for them as long as possible."

Unfortunately, Ramsey says, there's no magic wand to make more money appear, so Benny must prioritize the money he has. Often, adult children are faced with really hard decisions when mom and dad go into a nursing home. Benny's parents are obviously attached to their home, but it sounds as if they may not be returning to it. Are they going to pay to keep the lights on because, emotionally, they don't want to deal with the situation? Benny can help pay for his parents' care by selling the family home. Other families may need to sell a vacation home or dad's expensive car. The key here is being willing to emotionally let go of mom and dad's old life, in order to make wise financial decision for their current situation.

Any money you do have to help finance their care shouldn't be invested in stocks. Put it somewhere safe, such as a money market account. Chances are, you can't afford to lose a penny of this money.

LETTER 2
Beth writes: "My husband and I are 30 and 28, have one child and are expecting another, and we are about to get sandwiched. His parents are getting older and aren't in good health. They have military benefits, but little retirement savings. How can we prepare for five to 10 years from now, when they're going to need us? We want to do right by them. P.S.: My parents aren't far behind."

Beth's letter is actually good news, Ramsey says, because she's catching this issue early. She and her husband need to sit down with both sets of parents and have an honest discussion about the future. They need to talk about a will, about the power of attorney, and about financial assets and debts.

It's likely that Beth and her husband will face "the powdered-butt syndrome," Ramsey predicts. If someone has powdered your butt, they're not going to want to talk about money with you. In other words, the conversation is going to be awkward, and both sets of parents will probably resist sharing the necessary information.

Beth should be prepared for this and should verbalize it, saying, "This is going to be an awkward conversation, it's difficult to talk about it, but we are going to do so." Remind the adult parents that you are not after their money, this is not about an inheritance, it's about honoring them as they age and making sure they have the care they need and the lifestyle they want.

Ramsey also believes Beth and her husband should encourage their parents to buy long-term care insurance.

"This is mandatory for anyone over 60," Ramsey says. "You pay $30,000 to $50,000 a year for a nursing home and you must be ready for that. Unfortunately, most people still aren't buying this."

If you do decide to purchase the insurance, go through an independent broker who can shop around for the best deal.

Should all sandwich generation types be saving money to care for their parents down the road?

Ramsey says there's no need for a "parents fund."

"Keep building your own wealth," he urges. "You can figure this out if you're financially strong."

LETTER 3
Scott from Kentucky writes: "I have two children, and my elderly in-laws live with me for the majority of the year. Other times of the year, they stay with their other children. We support them almost exclusively with their bills. The total expenses come to $17,000 a year. How do I reconcile not being somewhat resentful of my wife's siblings for a minimal contribution to their parents?"

It's totally understandable that Scott resents his wife's family, Ramsey says. "But, at the end of the day, he has made a choice to honor his wife's parents, and he will reap the benefits of doing the right thing."

That said, Scott and his wife need to call a family meeting and tell people to step up. It must be evident that this is coming from her, as well; Scott can't be "the evil brother-in-law with an attitude."

"I would challenge them in person, strongly and diplomatically," Ramsey says. Perhaps they don't realize how much Scott is spending or what he's financing.

"But," Ramsey added, "if they don't budge, you still need to do the right thing. You can't control other people, but you can control your own actions."