The financial pressures on Boomers are huge. What they are and how advisors can help them clear a path toward retirement
They’re typically called Baby Boomers – the generation that
falls within the ages of 53 and 71 – but lately there’s been a new term used
for at least one segment of that population. The Sandwich Generation.
That’s because Boomers are more often the generation that is
being “sandwiched” between caring for aging parents while supporting their own
children. A Pew Research Center study shows that slightly more than one in
every eight Americans between the ages of 40 and 60 are caring for a parent and
raising a child simultaneously.
There goes the retirement savings plan.
Yet such financial obligations don’t have to be a major
strain on the retirement savings. When helping plan participants understand how
to afford child care expenses, parents in poor health, and a retirement of any
kind, retirement plan advisors can help plan participants balance a financial
plan that includes all three needs.
savings the priority. Of all things on the financial must-have list, the
only one that cannot wait is retirement savings. College savings can be made up
through loans and grants. Adult care expenses can be offset through various
Medicare/Medicaid assistance programs as well as the parent’s savings and
assets. Retirement savings, however, are much tougher to make up later. Counsel
your plan participants on keeping retirement savings plans in place and cutting
The 529 plan.
Designed to help parents save for their children’s college education, the 529
account can help participants sock away tax-free dollars. Depending on the
state, there may also be a deduction for contributions. Help your plan participants
set up a sensible payroll deduction into the plan.
Tax breaks. Child
care tax credits, adult day care or caregiver expenses and other deductions can
help your participants free up money that can be redirected into their
retirement savings accounts. Educate plan participants on what possible
deductions may exist for their particular situation.
accounts. Point plan participants toward pre-tax contributions to a
flexible spending account. Putting aside pre-tax dollars helps participants pay
for children’s care and, depending on the flex plan, the care of the aging
Set goals. When
faced with such a barrage of financial pressure, the sandwich generation can
have difficulty creating a sensible plan of attack. Retirement plan advisors
can help participants establish goals and reach more realistic benchmarks.
Also, advisors can help participants adjust goals as necessary, and explore
options that can lift some of the financial burden.
Help participants get
real. Advise them on what will happen to their retirement savings should
they decide to withdraw from their 401(k) instead of taking out a personal loan
or federal loan for their children’s education. Or perhaps they should work
longer or take part-time work during retirement.
Financial pressures needn’t derail your plan participants’ retirement investing. By laying out the options for your plan participants, they can make more informed choices that help them meet all their financial obligations.
Before leaping into the unknown, we recommend a thorough examination of your plan. Because we are experts in the field, we know the marketplace and know what your existing vendor is capable of offering. Through this examination, we can help you optimize the service you receive.get xpress proposal