Stuck in the Middle: How the Sandwich Generation Can Preserve Wealth in This Environment

By Published On: March 26, 2020Categories: Wealth Building3 min read
Stuck in the Middle

Just a few short weeks ago, were you confidently anticipating early retirement?  Or perhaps you were enjoying a sense of pride knowing you’ve honored your parents’ long-term financial planning by helping to monitor their healthy nest egg portfolio?

There is a unique subset of Americans that can be thought of as a sandwich generation: 40 and 50 somethings pursuing their own financial goals while overseeing their parents’ accumulated wealth to help them live comfortably in their elder years and extend the good fortune for the next generation.

In what feels like a sudden blow, market volatility of the past four weeks – resulting in a 30% stock market downturn – has many in this sandwich generation wondering whether their visions for their/their parents’ financial futures are still attainable.

Hearing that the stock markets have dropped -30% recently sounds significant, but that number may still be a bit abstract.  Facing the real-life numbers – watching a parent’s $5MM portfolio drop by $1.5MM seemingly overnight on top of seeing your own $2MM IRA lose $600,000 in a matter of weeks – is incredibly jarring.

So what should you do? Where do you go from here?

The Logical Next Step
How you respond in the coming weeks and months could significantly impact what happens to the long-term financial picture you’ve framed for yourself and your family.

Fear-based instincts might suggest that the logical next step is to regain control by taking immediate action that prevents further losses. After all, both you and your family worked hard to get here, and no one wants to see their dreams disappear.  Counterintuitive as it may seem, there may be greater risk in making defensive moves now than in staying the course or even contributing more to your portfolio.

Even if this dramatic market volatility is new to you as an investor, your parents have experienced similar periods – perhaps multiple times:  The Energy Crisis in the 70’s, Black Monday in October 1987, the Tech Bubble of the late ‘90s and of course, the Great Recession of 2008.  And it is a safe assumption that most experienced similar emotions.

Those who succeeded, however, never lost sight of the financial picture they framed and the long-term plan needed to keep it intact. Of course it was painful waiting for the market to recover during those turbulent periods, but willingness to stay the course is what enabled their portfolios to eventually recover and grow.  This principle applies just as much today as it ever has.

Emotionally reacting to these events increases the probabilities of irrevocable and punitive decision making.  And as hopeless as it may feel, the logical approach is to pause, consider next steps and assess the path forward in partnership with your CornerCap Wealth Advisor.

Bringing your Financial Picture Back into Focus
One of the best things you can do right now for your financial future is to re-frame your state of mind. Trust that by avoiding rash decisions, you are following the lead of your parents who protected their own financial future in difficult times and, by extension, their children’s inheritance. Then, allow the CornerCap proprietary process and data-driven financial modeling to do the rest.

Proper risk profiling and portfolio structure is as important now as it is in more relaxed times in achieving that financial picture you framed. Together with your CornerCap Wealth Advisor, you can rely on financial modeling to scenario plan and work towards some clarity in the context of your retirement and / or inheritance plans.

Your individual situation is unique and so, too, is the solution that awaits.  But by following a disciplined investment process in coordination with your advisor, you will increase the probabilities of success.

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