For those who are caring for their aging parents and raising kids at the same time, it can often seem like there’s never enough time, money, or energy to provide for all the family members who need you. In particular, handling finances when two different generations are relying on you can feel like an impossible balancing act — not to mention an exercise in feeling guilty no matter what you do.
But being the caregiver sandwiched between two generations makes it even more important for you to prioritize your own financial needs, especially when it comes to retirement planning. By protecting your retirement during this difficult season of your life, you’ll be in a better place to remain independent as you age, launch your kids into a more secure adulthood, and offer ongoing support to your parents.
Sound impossible? It’s not. Here’s how you can protect your retirement if you’re a member of the sandwich generation.
Retirement savings comes first
Retirement savings should get priority ahead of putting money into your kids’ college funds. You know that already. Your kids can take on loans for college, but there are no loans available to pay for your retirement.
The more difficult decision is prioritizing retirement savings ahead of paying for long-term care for your parents. That can feel like a heartless choice, but it is a necessary one to keep from passing money problems from one generation to the next. Forgoing your retirement savings during your 40s and 50s means you’ll miss out on long-term growth and the benefits of compound interest. By making sure that you continue to set aside money for retirement, you can make sure your kids won’t feel financially squeezed as you get older.
Instead of personally bankrolling your parents’ care, use their assets for as long as they last. That will not only allow you to make the best use of programs like Medicaid (which requires long-term care recipients to have exhausted their own assets before it kicks in), but it will also protect your future.
Communication is key
Part of the stress of being in the sandwich generation is feeling like the financial burdens of two generations (as well as your own) are resting entirely on your shoulders. You feel like you’ll be letting down the vulnerable people you love if you can’t do it all. But the truth is that you can’t do it all. And you shouldn’t expect that of yourself, nor should your family expect it of you. So communicating with your loved ones about what they can expect can help you draw important boundaries around what you’re able to offer them.
This conversation will be somewhat simpler with your children. You can let them know what kind of financial help they can expect from you for college and beyond, and simply leave it at that.
The conversation is a little tougher with your parents, in part because you need to ask them about nitty-gritty details about their finances. Whether or not money is a taboo subject in your family, it can be tough for your parents to let you in on important financial conversations — to them it feels like they were changing your diapers only a few short years ago.
Being in the loop on what your parents have saved, where it is, what plans they have for the future, and who they trust as their financial adviser, will help protect their money and yours. You’ll be better able to make decisions for them in case of an emergency, and being included in financial decisions means you can help protect them from scams. (See also: 5 Money Strategies for the Sandwich Generation)
Insurance is a necessity
Having adequate disability insurance in place is an important fail-safe for any worker, but it’s especially important for those who are caring for aging parents and young children. The Council for Disability Awareness reports that nearly one in four workers will be out of work for at least a year because of a disabling condition. With parents and children counting on your income, even a short-term disability could spell disaster, and force you to dip into your retirement savings to keep things going. Making sure you have sufficient disability income insurance coverage can help make sure you protect your family and your retirement if you become disabled.
Life insurance is another area where you don’t want to skimp. With two generations counting on you, it’s important to have enough life insurance to make sure your family will be okay if something happens to you. This is true even if you’re a full-time unpaid caregiver for either your parents or your children, since your family will need to pay for the care you provide even if they aren’t counting on your income.
It’s also a good idea to talk to your parents about life insurance for them, if they’re able to qualify. For aging parents who know they will draw down their assets for long-term care, a life insurance policy can be a savvy way to ensure they leave some kind of inheritance. If your parents are anxious about their ability to leave an inheritance, a life insurance policy can help to relieve that money stress and potentially make it emotionally easier for them to draw down their own assets.
Become a Social Security and Medicare expert
Spending time reading up on Social Security, Medicare, and other programs can help you to make better financial decisions for your parents and yourself. There are a number of misconceptions, myths, and misunderstandings masquerading as facts about these programs, and knowing exactly what your parents (and eventually you) will be entitled to can help make sure you don’t leave money on the table or make decisions based on bad information.
The eligibility questionnaires at benefits.gov can help you determine what benefits are available and whether your parents qualify. In addition, it’s a good idea to sign up for a my Social Security account for yourself. This site will provide you with personalized estimates of future benefits based on your lifetime earnings, which can better help you prepare for your own retirement.
Don’t be afraid to ask for help
Caring for children and parents at the same time is exhausting. Don’t compound the problem by thinking you have to make financial decisions all by yourself. Consider interviewing and hiring a financial adviser to help you make sense of the tough choices. He or she can help you figure out the best way to preserve your assets, help your parents enjoy their twilight years with dignity, and plan for your children’s future.
Even if a traditional financial adviser isn’t in the cards for you, don’t forget that you can ask for help among your extended family and network of friends. There’s no need to pretend that juggling it all is easy. Family can potentially offer financial or caregiving support. Knowledgeable friends can steer you toward the best resources to help you make decisions. Relying on your network means you’re less likely to burn out and make disordered financial decisions. (See also: 9 Simple Acts of Self-Care for the Sandwich Generation)
Like this article? Pin it!
This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:
5 Ways Gig Economy Workers Can Save for Retirement
How to Save for Retirement While Caring for Kids and Parents
401K or IRA? You Need Both
7 Retirement Planning Steps Late Starters Must Make
Hackers steal more than 1 million records globally every hour. And improvements in technology make it easierânot harderâall the time for cyber thieves to access your personal and financial information. While identity theft is a scary thought, you arenât helpless.
ExtraCredit provides tools to help you not feel helpless. Sign up for dark web monitoring and $1 million identity theft insurance for proactive alerts and support if the worst happens.
The three major credit bureausâExperian, Equifax and Transunionâoffer three ways to help you protect yourself from someone opening an account in your nameâa fraud alert, credit freeze and a credit lock. Though they sound the same, each one provides a different level of protection and impact and each has different requirements.
What Are Fraud Alerts?
A fraud alert is a basic form of credit protection. It acts as a roadblock that makes it harder for thieves to open an account in your name. If you have a fraud alert in place, a lender or other business isnât supposed to open an account for you without first taking steps to verify that the account is, in fact, for you and not someone pretending to be you.
Unlike with a credit freeze, your credit file is still accessible to business and lenders. Thereâs just an added step that must be taken before the lender or another business opens an account in your name.
Because you provide your contact information when you set up the alert, inquiring banks often use your telephone number to contact you if someone, including you, is trying to open a new account in your name. This gives you the opportunity to confirm or deny that you applied for the account.
Three Types of Fraud Alerts
There are three different types of fraud alerts that you can add to your credit reports at the three credit bureaus.
An initial fraud alert can be added by anyone at any time and for any reason. You can add it at any one of the three reporting agencies. The bureau you request an alert from has to let the other bureaus know about The other two then have to add an initial fraud alert to your report as well. An initial alert automatically expires after a year.
An extended fraud alert requires that you verify that youâre a victim of identity theft or fraud. Verification involves sending an identity theft report with a copy of a police or other law enforcement report. Requesting an extended alert, as with an initial fraud alert, can be done at one of the reporting agencies who then has to alert the other two bureaus on your behalf. An extended fraud alert stays on your report for seven years.
An active-duty alert or active-duty fraud alert is used for active military service members. Like an initial fraud alert, it lasts for one year but can be extended if the service member remains deployed. Like the other alerts, opening an active-duty at one bureau requires that reporting agency share it with the other two.
What Is a Credit Freeze and Credit Lock?
While a fraud alert instructs businesses to take steps to verify your identity before opening a new account, it doesnât keep them from looking at your credit file. A credit lock or credit freeze, also called a security freeze, does prevent anyone from looking atâor making a hard inquiry onâyour credit report.
A lock or freeze prevents a business or lender from even considering you for a loan or account, where an alert lets them see your credit report. With an alert, they can get to the point of wanting to extend you the loan or account, but not actually opening it without first verifying youâre the one who wants the loan or account.
With a freeze or lock in place, the lender can still make a soft inquiry against your credit report. So you can still get pre-approved credit card offers or have a prospective employer check your credit.
Initial fraud alerts and credit freezes are covered by government laws, specifically the Economic Growth, Regulatory Relief, and Consumer Protection Act, which requires they be free for one year.
Credit locks are not necessarily free or covered by laws. They are credit industry products.
Locks and freezes last until you lift them. Ending a freeze requires a PIN you receive when you place the freeze. Ending a lock can be done simply by asking the company who placed the lock usually online or by phone.
When to Place a Fraud Alert
Requesting a credit card fraud alert is easy and wonât hurt your credit score or affect your reports. Itâs okay to request one at any time. Because an alert only lasts a year, you may want to reserve requesting one for when you think you might be in jeopardy, such as:
You notice fraudulent activity on any of your accounts.
You think you are a victim of fraud.
Your information may be at risk in a data breach.
Your wallet, credit card, Social Security card, etc. was lost or stolen.
You want to take extra precautions against identity theft.
When in doubt, a fraud alert gives you some reassurance. If youâre planning to take out aÂ loan or apply for a credit card soon, an alert gives you some protection without restricting your ability to apply for financing.
If you have a credit freeze or lock in place and you apply for a loan or credit card, youâll have to at least temporarily lift the freeze or lock and take extra steps. Those steps arenât cumbersome but will take a small amount of time. If you choose a lock or freeze, simply know that youâll have to do some workâmore than answering a phone callâif you need a new loan or credit card and have one in place.
How to Apply for a Fraud Alert
Experian lets you submit a fraud alert request online. You can enter either your personal information or identifiers from a recent credit report. If youâd prefer not to input your Social Security number, you have the option to upload other documents to verify your identity.
TransUnion lets you request a fraud alert online through TransUnion by creating an account and completing the online form.
Equifax lets you create an account and file for a fraud alert online. With Equifax, you can also mail in an application or set up an alert by phone at 800-525-6285.
What Else Can You Do to Protect Yourself?
A fraud alert, credit freeze or credit lock are just some of the tools you can use to protect yourself from identity theft. Another tool you can use is your credit score. Using a service, such as Credit.com, to monitor your credit score can alert you to any changes in your score which can indicate somethingâor someoneâhas abused your credit.
You can sign up for a free Experian VantageScore credit score or a $1 FICO credit score from Credit.com. Your score includes access to a free credit report cardâshown belowâthat tracks the five key areas that go into your scoreâpayment history, debt usage, credit history, account mix and inquiries. Â Your score and your report card are updated every two weeks, so you can see any changes and take action if needed, including adding a fraud alert, freeze or lock when needed.
The post How Is a Fraud Alert Different from a Credit Freeze or Lock? appeared first on Credit.com.