Editors' pick: Originally published Dec. 1.
Gen X-ers are aging. Instead of debating what to do with their future, they're planning for retirement -- or at least trying to. While mourning the reality that Luke Perry (Dylan McKay from "90210") and Justine Bateman (Mallory Keaton from "Family Ties") are turning 50 this year, Gen X is busy trying to balance the budget as it often finds itself needing to support its parents and perhaps its children as well. This puts these Gen X-ers squarely in the middle of the "sandwich generation."
Pew Research Center defines the sandwich generation as adults "who have a living parent age 65 or older and are either raising a child under age 18 or supporting a grown child." The reality for this sandwich generation is that they have also become financial supporters. In fact, a recent study by TD Ameritrade found that one-fifth of Americans fall into this category, meaning that they provide financial assistance to a parent and/or child.
This survey found that 13% of Gen X-ers are financially supporting, on average, one or more adults. Although those who find themselves in this position say they are happy to make the sacrifices needed to help out, doing so puts a strain on finances, which can cause a ripple effect, eventually leading to delayed retirement.
So what can Gen X-ers do to put themselves in the best-possible position if they find themselves in this role? The first, and perhaps most important, thing is that people have to be honest with themselves. By and large, these Gen X-ers report that helping out their loved ones does not negatively affect them financially. Yet, doing so has led this group to hold an average of $22,000 in debt (outside of their mortgage) with more then half (56%) saying they have needed to borrow funds or withdraw from savings to cover expenses.
Getting back on track
The reality is that it's time for members of Generation X to ensure they have a plan in place, whatever their current financial situation.
As with everything, it's more effective to be proactive than reactive. So those fortunate enough to not find themselves in the position of financial supporter should consider upping their current contribution amount. Padding savings can also help serve as a buffer if a major, unexpected life change should occur.
For those Gen X-ers who already find themselves raising a family and supporting their parents, there are things that can be done to play a bit of catch-up. It will be important to step back and re-examine long-term saving goals. Scheduling a time to sit down and review your portfolio and/or speak with a financial advisor may help put things in perspective and solidify a plan of action. And as you do, consider some of the following options.
Up your contributions. If and when things have returned to normal, look at increasing the percentage of your paycheck that goes to your retirement or investment accounts. Even a small adjustment can make a difference thanks to the potential of growth over time.
Review your portfolio. Take time to review your investments. Make sure your allocations still align with your long-term goals and time horizon. Consider whether there are adjustments that need to be made, if even for a short time. There is a lot to take into consideration here, so be sure you consider the different scenarios and how they might be impacted by your financial goals.
Make budget changes. If you find yourself in the thick of a situation where you've become a financial supporter, look for places where you can make cutbacks. The changes don't have to be permanent, but if doing without a few things now means avoiding adding to your debt, it's well worth it.
The good news is that whatever steps need to be taken, there are plenty of resources available to help people get their finances in order. It may take a willingness to examine and adjust things as needed, but a solid plan makes all the difference in the world when it comes to pursuing financial goals.