Why Boomers Might Not Leave Inheritance: Top Reasons Explained
TL/DR –
Judi and David Koncak, both college graduates who had successful careers and saved for retirement, are nearly out of money in their golden years primarily due to healthcare costs. Health care costs in retirement, including those for insurance, treatments, and long-term care, are a significant factor that depletes wealth, potentially impacting the anticipated transfer of accumulated wealth from baby boomers to their children. While there is an expectation of a significant generational wealth transfer amounting up to $84 trillion in assets from baby boomers to younger generations over the next 20 years, it is suspected that a considerable portion of this might end up in the healthcare system.
Judi and David Koncak’s Retirement Struggles
Despite successful careers and savings for retirement, Judi and David Koncak find themselves with depleted savings due to health costs. Forced to return to work and sell personal items, Judi Koncak is also relying on nonprofit The Senior Source for help with bills.
The Dilemma: Healthcare or Inheritance?
The Koncaks’ situation mirrors many other older adults grappling with escalating healthcare costs. Even insured Americans struggle with healthcare expenses, leaving the anticipated wealth transfer to younger generations in question.
George Schein, a researcher at Nationwide Retirement Institute, indicated that healthcare costs could significantly affect the wealth transfer from baby boomers to millennials and Gen-X children. He added that one-third of Medicare beneficiaries, especially those under 65, have difficulty affording healthcare.
The Myth of the “Great Wealth Transfer”
Although baby boomers hold 52.8% of the nation’s wealth, high healthcare costs could diminish the anticipated $84 trillion generational wealth transfer over the next two decades.
The High Cost of Healthcare
Since 2000, the price of medical care has soared by over 114%, significantly outpacing the 81% rise in overall prices. Furthermore, healthcare costs typically escalate after the age of 65, with those over 85 using three times more healthcare services than those between 65 and 75.
Avoiding Going Broke to Leave a Legacy
Financial adviser Justin Silvers recommends purchasing long-term care insurance in your 50s as a way to mitigate expensive healthcare costs. Alternatively, annuities could provide additional monthly income during retirement.
Options for the Strapped
For people like the Koncaks, finding part-time work, selling personal items, and relying on family help are some of the steps they’ve taken to cope with healthcare costs. Judi Koncak admitted that she might have to sell her jewelry, while Kathy Kiersted expressed fears about the future due to healthcare stress on their finances.
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