Sandwich generation baby boom children
must plan financially to help parents
By Michael D. Larson • Bankrate.com

They helped house today's baby boomers years ago. Now, many elderly Americans are turning to their children for assistance themselves.

Some are moving into "in-law suites" with their sons and daughters. Others are living in nearby condominiums or townhouses their children have bought for them. Those who need the most care are taking up residence in nursing homes or assisted-living facilities.

In fact, so many aging parents need housing help today that people born in the '40s and '50s are finding that providing assistance to their parents can be as taxing as raising a family. Squeezed between the needs of their children and their parents, the sandwich generation is finding it's critical to plan ahead for the day mom or dad may move back in.

"You're in the baby boomer age," says Richard Biondi, a mortgage broker who owns RJB Financial Consultant in Massapequa, N.Y. He and his brother purchased a home for their mother, now 85, almost two decades ago, while a sister relocated there in 1996 to help with household tasks.

"There are all kinds of situations," he adds. "Somebody's going to have to put something in place to make it work."

Searching for a new happy ending
Americans have long enjoyed striking out on their own, starting families and making their houses into homes. For years, many of their parents have helped by providing down payment money, co-signing on mortgages and even selling family properties to their kids at below-market prices. But as they've aged, these parents are finding that living on their own can be challenging -- and even dangerous. They're increasingly turning to their children for housing help as a result, forcing boomers to take a hard look at their options.

"I'm coming up against all of this right now," says Marilyn Steinmetz, a certified financial planner with Money Matters in West Hartford, Conn. She and a brother moved their 89-year-old mother, who has Alzheimer's disease, into a community home last July with round-the-clock care after considering the costs and benefits of tending to her at home.

"I had to weigh all these options," Steinmetz says. "To take care of her would have been very difficult. I work out of my house. She needs 24-hour care. I have a house that has two levels. She couldn't climb the stairs, and I travel a lot. It would be very hard on both of us."

"Sometimes I feel selfish," she adds. "But I know that she's getting better care than she's getting with me and she should be happier because she'd have nothing to do here."

Options abound for able elders
While assisted living is the way to go for some consumers, others have parents who don't need full-time assistance. These folks have a whole range of housing options. Biondi and his brother purchased their mother's home 20 years ago and put it in the brother's name. Workers hired by the homeowner's association take care of some of the maintenance while Biondi's sister helps with the rest.

My mother "was retiring and she was looking for a place to retire," Biondi says. "We started to find out what she wanted to live in and where she wanted to live. Then, we were able to acquire what she wanted. It just happened to be in a stage in life where we could do something like that."

Buyers looking to do the same thing today will likely have to put more money down or pay a slightly higher rate than they did when purchasing their own home. That's because the loan for the parents' home will probably have to be done as a "non-owner occupied" or "investment property" mortgage. Lenders treat such loans as riskier than mortgages used to purchase primary residences, and price them accordingly.

Consumers who don't want to deal with the upkeep of a single-family home can go for a condominium or townhouse instead. Though doing so might boost the monthly payment because of condo fees and other charges, it can keep borrowers from having to hire lawn-cutters, plumbers, pool-cleaners and all the other professionals needed to keep a house in order.

Keeping the folks closer to home
Many children want their parents even closer to home, though, so they can take better care of them. These consumers have a few traditional choices: buy homes with in-law suites, purchase properties that are large enough for the parents to have their own wings or expand their current homes to produce extra living space. But in Arizona's Lake Havasu City -- one of the top retirement destinations in the country -- some forward-thinking customers have opted for an even more creative arrangement.

"I run into a lot of people who buy a second vacation home here. They can be from New York, Idaho, Wisconsin, Florida or whatever. They spend a couple weeks there or a month or two, but their elderly parents live here year around," says John Ellis, vice president of Lake Havasu City-based Mohave State Bank.

"It kind of serves two purposes. They want a place for themselves, but they're also trying to help out their parents," he adds. In addition, "they're looking for tax write-offs. They don't want to get into investment property or a rental and if the parents are there, they're very comfortable."

Whatever their approach, people who choose to house parents near like-aged residents can expect to find builders like Branden Lowder willing to help. The president of Lake Havasu City-based Desert Mirage Properties Inc. says his company started offering its "Casita" model home in western Arizona about five years ago. The name, which means "little house" in Spanish, refers to the self-contained in-law building that comes with the home.

"Right now, a lot of the buyers, even though they might not want their parent in now, they're preparing for it," says Lowder. He estimates that about 60 percent of the three dozen Casita homes sold during the past few years have gone to buyers wanting to house aging relatives. "They're getting ready for the fact that someday, they're going to have to take care of mom or dad, or both."

Homes for the 'not-so-well to do'
Homeowners with less money to spend needn't despair. They may be able to expand their existing properties. Second mortgages, government loan programs such as Title One, and other financing options can assist with the bill for an in-law suite. Owners can subdivide a house into wings as well.

Regardless, all of these approaches to housing aging parents require a significant amount of preparation, both financial and emotional, experts say. That's why children need to evaluate their own plans, along with their parents' needs, as soon as possible.

"Taking care of your parents is wonderful, but you've got to realize the impact on your life, too. It's very difficult for a lot of people to do that," says Steinmetz, the CFP. "You can't get away. You can't take vacation. You have to be there for them. It's round-the-clock care."

-- Updated: Dec. 1, 2000