Beware or be sandwiched:
Financial gerontology training prepares pros for senior shift
January 30, 2006
Move over sandwich generation -- a new generation is taking your place.
Whereas the sandwich generation represents those who are simultaneously caring for their children and parents, a "senior sandwich" generation is emerging. They are pressured by a confluence of trends: Parents and elder loved ones are living longer than they did a generation ago; couples are having children far later in life than their parents; and college and post-college-age children are increasingly living at home.
Instead of worrying about juggling daycare, soccer practice, carpools and the occasional care of an elderly parent, members of the so-called "senior sandwich" generation are increasingly finding themselves delaying their own retirement in order to pay for elder care, college tuition, as well perhaps their own long-term care insurance.
Those pressures can make traditional financial planning strategies inappropriate as baby boomers face financial and emotional struggles unheard of in previous generations.
"We've got people in their late 50s, 60s and even 70s with parents who also have dependent children and even may have parents-in-law," says Janice I. Wassel, the director of the gerontology program at UNC-Greensboro and co-director of a new joint gerontology/MBA dual degree program.
"The money that parents could have been putting away for retirement is now going to caring for adult children and paying for elder care," she says. "That extra bit of disposable income just isn't there anymore."
'Financial gerontology' emerging
Despite the number and relative affluence of baby boomers (the U.S. Census Department predicts the number of those aged 65 or older in North Carolina will more than double from 969,000 in 2000 to 2.2 million by 2030), many boomers have adopted what some experts say is a far less than proactive approach to financial planning.
Beyond their own retirement and long-term care needs, they aren't ready for the ever-mounting expenses related to caring for elder parents and relatives, children and other financial dependents.
While living to 100 may sound great to some, longevity can be a double-edged sword, experts say. Because of the increased longevity of both boomers and their parents, boomers can expect to spend one-third -- if not more -- of their adult life caring for a parent aged 65 or over, Wassel says.
To that end, a relatively new field -- financial gerontology -- has emerged within the last decade to bridge the gap between the need for financial planning and the need to care for elder loved ones, dependent children, and to accumulate and manage wealth for baby boomers -- some of whom will live beyond the middle of the century mark.
"A lot of financial professionals may not understand that financial issues are also family issues," says John Migliaccio, president of the American Institute of Financial Gerontology, a Florida-based organization that trains professionals to become Registered Financial Gerontologists.
There are currently 150 Registered Financial Gerontologists, a figure Migliaccio expects to increase "dramatically" within the next five years.
Both Migliaccio and Wassel -- who is also a Registered Financial Gerontologist -- say that financial gerontology goes beyond merely apportioning dollars and cents. Professionals, from financial planners to attorneys, insurance agents, accountants, real estate agents and benefits administrators, need a greater understanding of what services and programs apply to older adults as well as how aging affects their clients' families.
"We age as individuals, but collectively we age as families," Wassel says. "Very few financial planners are equipped to look at family dynamics."
Such family dynamics include considering the financial needs not only of parents, but also of step-families, long-distance care givers, empty nesters and anyone else affected by the extreme costs related to an aging population.
"People working in banking and financial services are more interested in how their products sell over understanding the needs of consumers," echoes A. Frank Johns, an attorney specializing in elder law at Booth, Harrington and Johns in Greensboro.
Johns, a former president of the National Academy of Elder Law Attorneys, says financial professionals who don't have specialized training in gerontology lack the expertise to estimate how much diseases such as Alzheimer's or Parkinson's can cost not only individuals, but also their families -- both financially and emotionally.
According to the Alzheimer's Association, the average lifetime cost of care for someone with Alzheimer's is $174,000, with family members providing 75 percent of the care at an out-of-pocket expense of $19,000 a year.
Even those who think they have done a significant amount of financial planning may not be on track for a future that could include chronic diseases, Johns says.
"Mid-lifers who defer income to their 401(k)s, IRAs, and standard ways of preparing for retirement -- none of that adequately addresses the extreme costs of old age," Johns says.
If older people wait until they have been diagnosed with a life-threatening illness or other acute situation before they do anything, they have eliminated many of their options surrounding finances, trusts and regulatory provisions, Johns says.
Certified geriatric financial planners should be able to help clients negotiate the maze of ever-spiraling elder care costs -- both for themselves and for their elders, Migliaccio says.
For example, a certified geriatric financial planner should know the costs of nursing homes, assisted-living and continuing care retirement communities, home health care aids and whether it's best to use long-term care insurance, family assets or other means to pay for that care. And they should be able to help clients plan for "out-of-sight" expenses such as lost and unpaid wages due to elder care.
Experts say the gerontological knowledge gap extends well beyond educating just investment planners and other financial professionals. Because of the complex family dynamics, human resource departments need to re-tool themselves to accommodate the needs not only of those caring for elders, but also to assist older workers whose health and living situations may change as they age.
"Plan, plan, plan; it's so important," says Jan Payne, elder care coordinator with SAS Institute, the analytic software company in Cary that was named last year to Fortune magazine's annual "100 Best Companies to Work For."
As one of only handful of full-time, staff elder care specialists in the country, Payne says the elder care and financial planning issues she sees encompass nearly every type of family situation, from those struggling to pay for home health care for an aging parent to employees squeezed by paying for college and long-term care for an elder loved one.
Payne says that most human resources departments don't have enough specialized knowledge of elder care and financial planning issues to adequately advise employees. To that end, Payne expects to become a certified financial gerontologist later this month.
"My role is to keep the employees focused on the job," says Payne, adding that when employees must take time off or cut back on hours because of elder care, it affects the company's bottom line.
For most human resources specialists and other managers, the resources to address elder care and financial issues related to aging have yet to be established, says UNCG's Wassel.
"It's new," Wassel says. "Elder care in the workplace is where childcare in the workplace was 20 years ago. We're going to need to become much more creative in the workplace."
Jill Yesko is a free-lance writer who contributes to The Business Journal