Wedged between paying your children’s college expenses and providing financial support to your parents — at the same time? Welcome to the “sandwich generation.” Most of the advice out there focuses on the challenges of protecting inheritances while managing your parents’ money. But an AARP study shows that only 19 percent of boomers will receive an inheritance.

If your parents are middle-class, you’re in a tough spot. The wealthiest seniors can afford the high costs of aging, and those with few assets qualify for Medicaid. For seniors in the middle, though, families often have to step in to help. Bankrate’s tips below focus mainly on resources to help you manage your parents’ finances.

As for your kids, the best time to help them is when they’re small — by opening a 529 plan or Coverdell education savings account. If they’re seniors in high school and you’re already squeezed, your only assistance may be helping them get student loans. Whatever you do, don’t be tempted to dip into your retirement accounts to help out Mom, Dad or the kids. That’s financial suicide.

Educate yourself on the legal issues.Even if your parents don’t own a home or have significant assets, arrange to meet with an elder law attorney. It’s difficult to sift through such legal documents as a living will, last will and testament or living trust. And power of attorney issues are complex. For instance, there’s a difference between power of attorney and durable power of attorney.

“If you have a power of attorney over a parent, but not a durable power of attorney, and your parent develops dementia, then your power is gone,” says elder law attorney Craig Reaves of Reaves Law Firm in Kansas City, Mo.

To find an elder law attorney in your area, ask friends for a referral or contact the National Academy of Elder Law Attorneys for recommendations.

2. Talk to your parents.Sounds easy enough, but your parents come from a generation that considers financial matters private. Sharon Burns, CPA, and author of “How to Care for Your Parents’ Money While Caring for Your Parents,” says these are rough waters to navigate.

“Take advantage of ‘reachable’ moments,” says Burns. “If a friend’s mom has died, mention this to your parent and say, ‘Maybe we should talk about this.’ Start generally, and don’t immediately suggest taking over day-to-day finances.”

Don’t wait for a crisis to get things moving.

“At some point in everybody’s life, your ability to deal with complex financial issues is going to diminish. It’s not a question of if, it’s a question of when,” says Mark La Spisa, Certified Financial Planner and president of Vermillion Financial Advisors in South Barrington, Ill.

3. Work with your siblings.If you’re an only child, then the majority of responsibilities for helping your parents belong to you. If you have one or more siblings, plan a get-together and decide who’s going to manage the finances.

Burns says it’s vital that the person responsible for finances keeps everyone informed. She recommends sending an annual report to family members that shows the current financial picture, how the money has been spent and so on. “Even if a sibling appears disinterested or distant, keep that sibling in the loop,” says Burns.

4. Look at the numbers.Make a list of your parents’ income sources, including investment income. If your mom’s meeting her monthly bills and still able to save a few bucks, that’s great. If she’s having a hard time making ends meet now, imagine how difficult it will be when she’s experiencing a health crisis. Consider this a reality check.

5. Stretch out the money.If your dad has limited savings and modest income sources, help him find ways to make the money last as long as possible. Review his budget with him and see if there are any unnecessary expenses. Research your options and you might be amazed at some of the services he might qualify for. Visit the U.S. Administration on Aging’s Web site for resources and helpful links. And don’t overlook resources available in your state.

“Calling your state’s Department of Aging is a good first step,” says La Spisa. “And almost every community has a senior organization with an array of programs, from Meals on Wheels to visiting nurses to handymen who’ll come over and fix things.”

6. Consider a reverse mortgage.If your parent owns a home, a reverse mortgage could provide a needed income stream. This is a home loan that converts a portion of the home’s equity into cash payments to the homeowner. But the homeowner is still responsible for property taxes and insurance. And there are a few other caveats.

“It’s not taxable income to the beneficiary, which is the parent or homeowner, but they have to remain in the home. Once they leave the premises, they have to sell their home or pay off the debt within 12 months after leaving,” says Thomas Space, of Advisors Financial Planning Group in Gilford, N.H.

If your parents are joint owners, it’s possible that one parent can stay in the home if the other parent needs to go to a nursing home. But these rules are complicated. Check out the AARP Web site to get some basic facts on reverse mortgages and be aware of the pros and cons.

7. Reduce health care costs.If your mom is getting by on Medicare, that’s fine while she’s still healthy. But adding a supplemental insurance policy may save a lot of headaches — and money — if she ever needs to be hospitalized. And most seniors struggle with the high cost of medication. If she doesn’t have a discount card to lower expenses, ask her pharmacist to help you evaluate the Medicare Part D programs.

Long-term care insurance is something to consider in your 50s or 60s.

“Typically, once the parent becomes 70 or older, even if you want to get the long-term care insurance, the premium is too costly or the parent’s health makes it prohibitive,” says La Spisa. Instead, consider getting a policy for yourself as a part of your own retirement plan.

And if you’re thinking of distributing your parent’s assets as gifts or by “spending down” to qualify for Medicaid, seek legal advice. “You can really mess things up if you don’t do this correctly. Only an elder law attorney in your state will know how to advise you regarding these issues,” says Reaves. The Centers for Medicare & Medicaid Services Web site gives basic information on eligibility rules and services.

8. Consider different housing options.Your 82-year-old father has enough income to stay in his $700-per-month apartment. But what if he falls or develops a serious illness and can’t live independently anymore? Here are some options, but remember that the costs and availability vary by state.

Where Dad can live if he needs skilled attention:
  • Personal care home. State-licensed individuals who take care of at least two or three elderly people in a residential home operate these. Expect to pay $1,000 to $3,000 per month.

  • Assisted living facility. Services offered and independence requirements vary by facility. Expect fees to range from $2,000 to $4,500 per month.

  • Skilled nursing facility. Costs vary widely, but expect to pay $4,000 to $8,000 per month. There are some beds available for Medicaid patients, but you may not get your first choice or a desirable location.

  • Section 8 housing. These HUD-subsidized programs are for independent seniors with limited incomes. The monthly payments are determined by your parent’s income. There are often waiting lists for these, so think ahead.

For more advice and recommendations on housing options in your area, talk with an adviser at A Place for Mom Inc., a free referral service that inspects personal care homes as well as nursing homes and assisted living facilities.

9. Don’t jeopardize your own retirement security.After you’ve done everything you can to lower your parents’ expenses, evaluate how much you’ll need to spend each month to keep your parents afloat. Then be sure that’s a line item in your own budget. And fund your own 401(k) regularly, even if it means giving up a few luxuries along the way.

If you’re tempted to withdraw funds from your own IRA to help out your parents, Burns suggests rethinking that strategy. “Unless you’re at least 59½ when you withdraw funds from retirement plan accounts, it creates taxable events,” she says. “A better choice is to access government and community resources.”

10. Open a college fund.You’re making your monthly mortgage, contributing to your dad’s monthly expenses, funding your 401(k) and now you need to pay for college. If your kids are still relatively young, consider opening a 529 plan. Space suggests requesting donations to the college fund on your children’s birthdays, special occasions and for high school graduations. Your parents may not be able to contribute, but tap into the generosity of godparents, aunts and close family friends.

Even if you don’t have a robust amount in the 529 account, you might be surprised to learn there’s often wiggle room in tuition fees. If a college is very interested in your child, you can negotiate — but this only works if your child has another option. “The real key is to make sure your child gets accepted at two or three schools,” says La Spisa.

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