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    Careful planning is a must for the sandwich generation

    It’s not always a good thing to be the middle. For the children of baby boomers, the middle can be a financially stressful place.

    Often called the sandwich generation, children of baby boomers tend to be financially strapped funding their children’s college educations, their own retirements and their parent’s lifestyles at an age when health care costs can increase dramatically.

    “The stresses are real, but families from all backgrounds can get through the period of college tuition payments, retirement finances and caring for aging parents with a little planning, diligent saving and knowledge of their financial situation,” says Tara Reynolds, corporate vice president with Massachusetts Mutual Life Insurance Company (MassMutual). “The most important thing families can do is to evaluate their present financial situation honestly with a trusted financial professional.”

    Jeff Duncan, a MassMutual agent based in New Jersey, notes there is not a one-size fits all solution.

    “This is a challenging place to be for many baby boomers. By understanding each family’s unique needs there are various ways to solve for the best outcome,” he says.

    Here are some tips to get your family conversation started and on a workable path:

    * Be open with your parents and children about your financial situation. Understand what retirement provisions your parents have made, what you have in place, and areas where gaps might occur. Consult a financial professional to help with this gathering and analysis of information.

    * Costs for long-term care services and health care in general are growing. The national annual average cost of nursing home care was $ 82,125 in 2010, according to the American Association of Long-Term Care Insurance. Anticipate a yearly 3 percent inflation increase in these costs – which would bring the average annual nursing home cost to almost $ 300,000 in 30 years.

    * Don’t leave your retirement plans to fall by the wayside. Shirking retirement planning now could leave a burden on your children to care for you later in life. Contribute at least the amount your company will match in your 401(k) plan, and work with a financial professional on other retirement saving avenues you are able to take.

    * For your children’s college funds, set up a 529 plan to help absorb some of the cost of their education – which is now running close to $ 40,000 a year, on average, for a four-year degree. Also, talk with your children openly about scholarships and loans, and how they can help handle costs for their education. A compromise might be having them enroll in a two-year or community college and live at home to help cut costs.

    * Establish a long-term insurance plan for yourself. Set up life insurance to protect your family in the event you die prematurely, and disability insurance to protect your income should you become too ill or injured to work. Also, consider establishing a long-term insurance plan – either as a stand-alone product or as a rider to a life insurance policy – to cover the long-term care needs of you, your spouse and/or your parents.

    The sandwich generation tends to be bombarded with financial demands from all directions, but the children of baby boomers don’t have to put their retirement planning on hold. Following these tips can help you avoid the stress that can result by failing to plan.

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