Kids in College and Aging Parents? The Generational Squeeze Play

12 min read
June 26, 2018

Kids in Collge and Aging Parents? The Generational Squeeze Play


Kids In College And Aging Parents? The Generational Squeeze Play, by Patrick King

Do you have kids in college and aging parents that you need to care for? Welcome to the old “generational squeeze play”. We've got your playbook for how to deal with this coming up.

Hey folks, I'm Patrick King with Transformative Financial. Here on this channel we help people make money, keep money, and feel more financially secure along the way. 

On today's episode, if you've got kids that are in college and parents that are aging that you probably are going to need to care for, welcome to the old generational squeeze play. This week's episode comes from a viewer David in Alpharetta, Georgia. He wanted to know what are the “in-betweeners” as he calls them, that have both kids that are going to college and parents that they need to care for. What can they do to plan for this financially?

Well, you know, welcome to your prime spending years. You've got the adult kids and they tend to get more and more expensive until they finally get off the payroll and leave the nest. It's common to feel stuck when you're in this portion of your life and I've seen this a lot. It's common also to feel like you're not making a lot of headway financially. You've got money going out and in large chunks for many different reasons.

Folks are having kids later in life, so that puts that time when you're caring for your parents squarely into that time where the kids are entering college and early adulthood. Then plus, you've got a lot of “boomerangers” these days because it's a tough environment economically for adult children who are just starting their careers, who are just getting out of college. You get a lot of a lot of kids that are coming back and living with mom and dad after they've graduated college these days.

You've got a perfect mix where all of this is taking place for a lot of people right now. Don't feel like you're alone if you find yourself in this situation. Number one, the first thing that I would do or I would recommend if you're in this situation, is talk to your parents. When you approach them about these kinds of conversations make it a no judgment zone. In a past episode, I talked about how, certainly, for me they're just numbers.

I make no judgments around the financial situations that clients show up with, but make sure you articulate that, they're just numbers. Their financial situation is what it is. Let's see what it is and let's make a plan. Many people let pride get in the way of progress. As you approach your parents about this, do it in a way as empathetic and judgment-free. Be careful with your language. Don't say, “shoulds”. "WE should be in this area.

We should do this." There’s what is and what we need to do to get where we need to be. That's number one, make it a no judgment zone.

Number two, when talking to your parents is, get a full picture of their finances. Again it can be uncomfortable diving into these situations but you have that mentality of a doctor. The doctor is going to run labs to see how your entire body is doing and it just is what it is.

That means income, expenses, assets, liability, insurance policies, the whole shooting match to get your arms around, "Okay what exactly are the problems that we need to plan for immediately? What are the potential problems in the future that we need to know they're coming down the road?"

Then finally when talking to your parents, plan for their long-term care. They may or may not have a long-term care policy. They may or may not have sufficient assets to pay for long-term care. But even if they don't have the assets or have and insurance policy doesn't mean that they aren't going to need that care.

This came from a conversation I had a couple of weeks ago regarding this. There's two ways to do this: you can be a “care planner” or you can be a “care giver”. What you want is to be a “care planner”.

You certainly don't want to do the day-to-day functions of taking care of the health of your parents, especially if you've got a career and a job and you've got kids that are in college and other responsibilities. Make that a priority. That was number one, talk to your parents.

Number two, talk to your kids. Yes, they are young and they may not be wise to the ways of the world in a lot of respects but what I would recommend, and I think this may be a bit controversial, is level with them.

Just say, “Hey look, kids, we've done our best to raise you and shelter you a lot of ways from the hardships of the world," but the hardships of the world are going to come calling to them at one point or another in their lives. They may as well have early exposure to it and just lay it out on the table. "This is what money comes in, this is what money goes out and this is what it cost for you to go to college, this is what it costs to take care of grandma and grandpa. As you can see we have limited resources to do this."

Don't try to hide it from them. Parents may or may not agree with me on this but again the realities of the world are going to catch up with them whether you like it or not. So you may as well introduce it to them in a way that's compassionate and kind and supportive rather than it be a harsh wakeup call for them later in life.

Number two, when talking to your kids, I would also say and think about talking with each other about what you want to do for your kids.

Make an agreement with your kids about who's responsible for what. That starts with you. A lot of parents that I've done college planning for throughout the years, they said "Look our parents helped us with college but we don't want to -- it's just gotten out of hand with the cost these days -- we don't want to pay for a full Ivy League education. What we want to do is: we'll be responsible for the costs of an in-state public school.

Anything in excess of that, the kids are going to be responsible for on their own, whether that means they make money over the summer or whether they take loans. We’ll do a certain amount or we'll cover half." I've seen that one before.

Because the stakes are high, college is expensive, and many parents want their children to have skin in the game. I'm all for having fun in college but at the same time you still need to execute and you need to get that education and prepare yourself for life in the real world.

My next point is, encourage them to go to in-state schools or public schools because the cost is going to be so much less. These days, I think, studies have shown that having a college degree helps with employment tremendously. Whether there's a differentiator between an in-state school and an out of state liberal arts school, it's hard to say. I would argue that money may be well better spent on a master's program or a Ph.D. program.

If they go to less expensive in-state school, here in Georgia we have the HOPE scholarship, instate schools could be a quite appealing financially. Save that education money for a master's perhaps, instead of spending it for them to go to an out of state private liberal arts type college where you're going to be paying $60,000-$80,000 a year.

I encourage them to go to public schools and then put them to work.

If they're not in school, make them have a summer job. I certainly know that, when I was in college, my parents asked me to get a summer job and hand over my paycheck to them. At that point, I don't think I put up too much of a fight. Mom and Dad if you're watching, I would certainly would love to hear your take on this too! But I was happy to give the check to Mom and Dad because it was a pretty darn good deal.Of course, I got plenty of that back and discretionary money through the college year anyway but yes, put them to work.

This is another way that the kids can have skin in the game as part of this generational squeeze play that you find yourself in.

All right. Number one, talk to the parents. Number two, talk to your kids.

Number three, just take a deep breath. Yes. It's a tough time in life where you've got a lot of financial pressures on you.

You know that your retirement is coming sooner rather than later. You may not feel like you're making any headway, but take a deep breath. Part of that is, I would still recommend even if it hurts a little, continue to pay yourself first by contributing to your 401(k) or retirement plan. At least up to the company match, if you're lucky enough to have one of those these days. So, pay yourself.

Keep cash on hand if you can. Keep a little bit of dry powder in your checking account or savings account even though it may not be earning much right now. There's a lot of lot to be said for liquidity and optionality.

The flipside of that is, if you can avoid debt to finance some of these, please do that. It's easier said than done but if you need debt or let's say you need maybe a little bit of extra dry powder look into a home equity line of credit against the equity that you've got in your home.

I would go ahead and recommend setting one of those up even if you don't have to tap into it, but having it there for some quick cash, at this point with relatively low-interest rates, it can be a nice buffer if something happens and there are some unexpected expenses. Home equity line of credit.

Of course, get a financial plan! Here I am, the financial planner. Maybe you should get a financial plan first. All right, that was a little corny. But certainly figure out exactly what it's going to take for you to get where you need to be for the retirement and the life that you want to live.

Find out what's realistic and what's not, and then get help planning. There are certain tax-advantaged accounts that you can set out for education expenses. Talk to a CPA, perhaps, about how to structure some of these expenses for the most tax benefit but get professional help.

Whether it's a true financial planner who's an independent fiduciary financial planner, I've made episodes about this and I'll link to those in the show notes. Get some help.

Then last but not the least, if you need to make changes in order to make this stuff happen, you've got to be the adult. “Adulting” as the kids call it. It's not always pretty and it's not always fun, but remember you are modeling this financial behavior to your children.

What kind of financial behavior do you want to model for them? Do you want to model responsible behavior or do you want to model denial and irresponsibility? It's a tough question.

All right, folks, that's what I've got this week. I hope you got something out of this episode. If you liked it, please click “like”. Click “subscribe” if you want to see more videos like this. If you've got a comment or if you got more ideas around how to deal with this squeeze play between generations, or if you've got more ideas that you want to hear me talk about, leave a comment, send me an email. I would love to hear from you. 


Patrick KIngAbout the Authors
Patrick King is an Atlanta-based virtual financial planner with 10 years of experience working with CEOs, all-star athletes, Grammy winning artists and dozens of other folks from all walks of life. Patrick enjoys both ensuring that his clients are protected from life's potential pitfalls and encouraging them to live a richer life by prioritizing those dreams often relegated to the "some day" bin. When he's not working with clients, Patrick's pursuits include travel, photography, health and fitness, mentoring, cooking and searching for the perfect margarita recipe.





quentaraQuentara Costa helps the "Sandwich Generation" stay sane. She works with family caregivers who are working toward their own goals while caring for kids and aging parents.









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