Dinnertime at the Gomez household in Dracut, a suburb of Boston, involves feeding a blend of three generations. “It’s nutty,” Alicia Gomez commented about the seven family members who coexist in their home. “We’re nurturing my niece and nephew.”
“My mother lives with us, and my sister is here too.”
Alicia, aged 56, serves as the chief operating officer of a nonprofit organization, while her 58-year-old spouse, Chu Gomez, is employed in the logistics sector. They belong to the “sandwich generation,” wherein individuals support both their young relatives and their elder parents. The U.S. Census Bureau notes that such intergenerational living arrangements exist in approximately five million American households.
This setup can significantly disrupt retirement plans. “We were considering retirement at 62, thinking that would leave us plenty of time,” Chu recounted. “Then the other day, she mentioned, ‘You’re planning to work until you’re 70, right?’ I responded, ‘I suppose so.’”
As per labor economist Teresa Ghilarducci from the New School for Social Research in New York, individuals in their 50s should prioritize saving a substantial portion of their income.
“During your 50s, you might feel compelled to assist your adult children,” Ghilarducci advised. “You may also feel the necessity to support your aging parents. Nevertheless, don’t compromise your own retirement savings.”
The Gomez family is putting money aside, yet they are also grappling with over $500,000 in debt, which encompasses their mortgage, vehicle financing, and college expenses for their two daughters.
Chu anticipates that he won’t see the end of those college debts until he turns 71.
Preparing for Unexpected Family Expenses
For individuals in their 50s, various factors need careful evaluation.
This involves having candid discussions about the duration of any financial help provided to relatives, including older children. Other strategies might involve temporarily cutting back on retirement contributions to eliminate any high-interest debts, such as credit card bills, followed by a crucial focus on enhancing savings. Alicia remarks that the couple has sufficient income to manage their expenses.
“We have enough, but it’s not where we ought to be,” Alicia mentioned. “Heaven forbid, if one of us falls ill or faces job loss, how would that impact us financially?”
Indeed, both Alicia and Chu experienced layoffs in their 50s. “People in their 50s face a significantly heightened risk of job loss in their career,” Ghilarducci stated.
“Thus, stay vigilant and ensure you keep your job.” After being laid off, Alicia engaged in consulting work and eventually was reemployed, but for Chu, it took six months during the pandemic to secure a new position. During that time, Chu lost out on $13,000 in contributions, which would have amassed to around $40,000 by the time he retires, based on estimates from John Kelley and his team. This loss could have contributed to his retirement expenses, such as healthcare.
On average, a 65-year-old retiree should anticipate approximately $165,000 in healthcare spending throughout retirement, according to a Fidelity survey. The retirement challenges keep piling up for the Gomezes. “We had no idea we’d have to provide care for so many family members,” Alicia said.
“Thus, the unforeseen circumstances served as a significant wake-up call for us.”
