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Finances for the sandwich generation

Date posted:  12/21/15 07:45:00 AM Individuals in the sandwich generation must manage their financial portfolios with care to balance financial responsibilities.

Many middle-aged adults may be responsible for providing financial support to both their aging parents and their growing children. According to Pew Research Center's nationwide survey, 48 percent of individuals between 40 and 59 have financially supported at least one adult child in some form. About 27 percent of participants indicated they provide full financial support for their grown child. 

In addition, 21 percent of middle-aged adults also provided financial support to a parent in the past year. 

This demographic of individuals who are financially-supportive of both parents and children is commonly referred to as the sandwich generation. 

"21 percent of middle-aged adults also provided financial support to a parent in the past year"

Increasing need for financial support 
According to USA Today, young adults today are three times more likely to indicate they received financial help from their parents when they were starting out, compared to their parents. 

"A lot of today's millennials are dealing with a lot of financial factors that their parents, and certainly adults in America, did not have to contend with a generation or two ago," says Lynnette Khalfani-Cox, an author and personal finance expert. 

Slower job growth and crippling student loan debt are responsible for a majority of the financial issues many young adults face as they step into the working world. According to The Wall Street Journal, the average student loan debt for the class of 2015 is a little more than $35,000. The debt these young adults are held responsible for paying off immediately upon graduation makes investing in a home and supporting a new life far more difficult.

The recession did not just impact young adults. Aging Americans in the baby boomer generation are also feeling the repercussions. This creates a need for financial support from the sandwich generation to cover medical and living expenses that can't be financed through retirement funds. 

Increased need for financial advisement 
While an individual's private wealth and current investments might be sufficient to support their parents and grown children, it's important to also consider their own future. As members of the sandwich generation grow older, they will need their own retirement plans. With the cost of higher education continuing to rise, it's becoming more important to make the appropriate investments to meet income needs now and ensure principal growth for the future.

According to U.S. News & World Report, members of the sandwich generation worry about how they will be able to pay for their own care as they age, as resources - like time and money - are being drained and funneled toward their aging parents and grown children. 

A financial advisor is a great resource, noted Kiplinger. With the help of professionals, individuals can better manage their financial portfolios and work to ensure optimal return on their investments. 

"The stock market offers an opportunity to build wealth and grow a post-work nest egg."

Stocks for retirement 
When it comes to planning for retirement, members of the sandwich generation should make financial moves to support themselves in the future while providing for both their parents and children. The stock market offers an opportunity to build wealth and grow a post-work nest egg. 

According to Nasdaq, an individual's investment decisions are largely dependent on his or her current age. If retirement is near, investments should be more conservative. At a younger age, members of the sandwich generation can be a bit more aggressive when it comes to investing in the stock market. 

According to Forbes contributor Kenneth G Winans, a veteran investment manager based out of California, hiring a financial advisor will help individuals pick appropriate stock and bonds to best help them grow their wealth. 

Finding a financial advisor 
Forbes indicated one of the first things to determine when researching financial professionals is what is needed. For those in the sandwich generation, a retirement nest egg and funds to support both parents and children is likely a priority. Find a professional who can manage assets and cultivate financial growth. 

Asking for recommendations and consulting peers are other ways to find the right professional.

In addition, fees should be considered especially when considering the retirement fund investments of someone in the sandwich generation. Building wealth should be a top priority and service or trade fees may diminish returns.