USA: Caught Between the Elder Care and Education Money Pits

. NEW YORK, NY / BusinessWeek / Special Report / July 2, 2009 Something's got to give when you're caring for aging parents while paying for your kids' pricey education—and it's often your retirement plans By Lauren Young Anne Campbell is the kind of person who thinks ahead. An attorney specializing in elder law, Campbell, 51, spends much of her professional time helping clients maintain control of their futures—drafting wills, creating trusts, and writing advance medical directives. But now, Campbell and her husband, Dave, 56, are finding themselves pinched in ways they hadn't anticipated. They're putting their son and daughter through California Polytechnic State University at the cost of roughly $20,000 a year for each . They're also digging deep into savings to care for their aging parents. So when the couple's retirement investments lost 38% last year, their plan to slow down and shift to volunteer work in the next few years had to be put on hold. "Now we must assume that any job we can get and keep, we must take," Anne says with a sigh. Dave, who worked in management at Anheuser-Busch, took a less-than-golden "pewter parachute" when the company was acquired by InBev last year, says Anne. He currently helps manage her law practice. "We were just getting to the point where we were going to start enjoying life and travel a lot." Anne and Dave are stuck in what's known as the sandwich generation: people who care for aging parents while also supporting children. Even before the recession hit, sandwich generation members had to cope with pressure from both sides. With the downturn, they're facing harsher financial burdens. The result? People such as the Campbells are disregarding stock advice by cutting back or eliminating retirement savings, delaying retirement, and even raiding retirement accounts to help others stay afloat. New research by Country Financial found that 47% of parents are putting college expenses for their kids ahead of their retirement savings, up from 42% in 2008. In a recent survey of caregivers by Caring.com, 45% of respondents reported that they are providing some kind of financial support to elderly parents as a result of the recession. And an ING (ING) Direct poll in April found that nearly one in five parents who have savings set aside for their kids have tapped those accounts to cover bills or pay off debt. That's exactly what many experts say you shouldn't do. But even financial professionals are realizing that economic realities don't always mesh with well-crafted master plans. The same folks who dish out the fundamentals of financial advice—save for retirement, build an emergency fund for a rainy day, keep your estate plan in order—are learning some hard lessons that are causing them to rethink the advice they give to others. Anne Campbell is one of them. She's "stringently" advising clients to save more to meet health, retirement, and education needs. She's also working with local officials in her hometown of Vacaville, Calif., to develop cooperative housing for the elderly. "The ultimate irony of my situation is that every day I try to get the word out about what's coming to help people to avoid disasters," she says. But, as Anne can attest, even the smartest financial plans can go awry. Anne's father, for example, a retired fireman, had assumed his health-care expenses would be covered after a massive stroke. Now the City of San Diego is contesting the extent of his worker's compensation, so the family is paying for care and medical bills. Total cost so far? Almost $70,000. The Campbells also need a new family health insurance plan because Dave's COBRA coverage is running out. Anne, meanwhile, is losing up to 100 billable hours each month because of her caregiving duties. To hunker down, the family has cut out vacations, restaurants, birthday presents, and new clothes. They haven't visited their vacation condo in Hawaii in over a year, and they are selling two all-terrain vehicles. They'll use the money to pay for tuition and to aid Anne's parents as well as her father-in-law, who has his own set of medical issues. If the couple has extra cash, it will be used for retirement savings. But that is a big if. BYE-BYE CONVENTIONAL WISDOM Click here to read on........ Anne Campbell, for one, still wishes her parents, who live two hours away, would move in with her—even though she knows it could be a challenge. "As a society, we are not going to solve this problem unless we go back to the old days of families living together," she says. She often jokes with her law firm colleagues about buying a derelict motel in their California town, fixing it up, "and putting all of our loved ones in it." After a pause, she adds: "I'm only half kidding." [rc] Copyright 2000-2009 by The McGraw-Hill Companies Inc