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How to Prepare for Getting Caught in the Middle of the “Sandwich”

by Lila Quintiliani, AFC®
Military Saves Assistant Coordinator
Communication & Outreach

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Sandwich generation. It’s the term used to describe the group of Americans who have a parent aged 65 or older while still raising or financially supporting a child. According to a recent Pew Research study, this population is on the rise – nearly half of Americans fall into this group, and 1 in 7 Americans is actually providing financial support to both a parent and a child.

While the active duty military population is fairly young (according to Military OneSource, the average age of the active duty force is 28.6), military families still need to be concerned about being stuck in the “middle” of the sandwich – raising children while acting as caregivers for an aging parent. Here are some steps that can be taken to prepare for the time when a servicemember becomes a caretaker to multiple generations.

Have “the Talk”

Children, even adult children, may not be accustomed to talking to parents about the state of their finances. While it may be slightly uncomfortable to bring up the topic at first, it’s better to know the facts about their retirement plans rather than speculate.

·    Do they have a retirement plan and savings or are they depending on social security?
·    Do they have long-term health care insurance?
·    Do they have an estate plan in place? It doesn’t have to be a complicated legal document; it can even be a simple letter with instructions for where their bank accounts are and what insurance policies they hold.
·    Have they signed paperwork giving someone authority to act on their behalf if they are disabled or incapacitated?

Leaving the Military: Why a Cash Stash is So Important

By Scott E. Halliwell, CFP®, ChFC®, CLU®, CWS®
USAA

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Change brings stress; and leaving the military brings a truckload of it to your doorstep. Not only is the transition a major life event, it's also a major financial event. Picture this:

You just decided to quit your job.

You haven't interviewed in years, but now you have to get someone to hire you.

You eventually land a new job, but it's halfway across the country.

You uproot your family and move to a new town near your new job.

You find a new place to live. But at first, it just doesn't feel like home.

Oh, and while all of this is going on, the regular day-to-day challenges of life don't get put on hold. So, just for grins, add something more to the stress pile: your transmission locks up.

Now quickly, go back through that list. But this time, imagine the points as scenes in a movie starring you and your family — a movie titled, "Leaving the Military: Why a Cash Stash is So Important".

If you're planning to leave the military, the six bullet points listed above could very likely describe your short-term reality. To reduce the stress, do these two things: first, have an action plan; second, have a lot of money in the bank.

Pay Off Debt or Save for Retirement?

The following post comes from the America Saves Blog. Follow them on Twitter and Facebook.

May 15, 2013
By Barb Miller
Bankruptcy Specialist at LSS Financial Counseling

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Wow … what a loaded question! We always hear how crucial it is to get rid of toxic debt, especially credit cards with double digit interest rates. Therefore, people generally assume that paying off debt rather than investing for retirement is the correct answer. In my opinion, this is not really an either/or proposition. The best approach? Do both!

Where you need to be:

Before getting into why it is important to both save for retirement and pay down debt, we have to start from a common point. To be able to move forward financially, it is essential that you are 1) using a budget to control your spending, and 2) have extra income for both debt repayment and your future retirement.

If you are spending more than you earn each month (or have no idea how much you spend), it is time to deal with the basics. This means learning to live within your means. The brutal truth is if you don’t control your spending, you will likely continue to abuse credit, and never have money tucked away for emergencies or retirement.

Why Military Spouses Should Get Ready for Retirement, Too

May 14, 2013
by Lila Quintiliani, AFC®
Military Saves Assistant Coordinator
Communication & Outreach

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A recent report by the AARP Public Policy Institute highlights some sobering facts about women and retirement. While women typically live longer than men and thus will spend more years living alone in retirement, they earn less during their working years, spend more time out of the workforce as caregivers, are less likely to participate in pension plans, spend more on medical care and are likely to get less in Social Security. The situation is even more serious for military spouses. A Rand Corporation study found that military wives are employed at lower rates and earn less than civilian women*.

Another issue is that many military spouses do not realize that retired pay stops when a servicemember dies unless the military member opted to pay for the Survivor Benefit Plan. And even if a servicemember opted to pay premiums for the highest level of benefits for the SBP, the widow/widower will only receive 55% of retired base pay.

So what can military spouses do to ensure that they, like their active duty spouses, are moving in the right direction for retirement?

Save at Work

For those spouses who do work, they should try to contribute to an employer-sponsored pension plan if they are eligible for it. Even if the active duty member is saving through the Thrift Savings Plan, the working military spouse should have retirement savings in his or her own right, especially if there is an employer match of contributions.

Moving Out, Moving On

There are ways to smooth your transition when you hit bumps in the road.

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May 9, 2013
Excerpted from Veterans Handbook:
Tactics for Civilian Life. Copyright © 2012, Lightbulb Press.

If the transition to civilian life were simply about a change of address and a new job description, it wouldn’t be such an ordeal. But as millions of men and women have discovered, there’s a lot more to transition than most active duty military members might think—for both them and their family. There are unexpected hurdles that may be encountered, as well as unexpected costs that may need to be factored into the household budget. Knowing about these potential obstacles beforehand can allow servicemembers to be financially and mentally prepared before they transition out of the military.

Opportunities for Spouses

If a spouse isn’t a member of the military and eligible for transition assistance and veterans benefits, he or she may find it difficult to make personal and career decisions, especially when the military member is still sorting out his or her own future.

Spouses are eligible to attend the same transition workshops and job fairs that are available to military members. However, access to many of the spouse-focused career and education programs, including tuition assistance available through the MyCAA program and the Military Spouse Employment Partnership (MSEP), ends when the servicemember is no longer on active duty.

If a spouse has a scholarship through the National Military Family Association, or other education or training benefits, it’s smart to investigate what effect, if any, leaving the service will have on continued participation in the program and if any action is required.

Remember, you do have the right to assign the education benefits to which you’re entitled under the Post 9/11 GI Bill to your spouse or children, rather than using them yourself. But the servicemember must make that decision while still on active duty and meet other conditions that may apply, including incurring service commitments.