Unfortunately, neither health insurance nor Medicare covers long-term care. Medicaid could become your only option, so do what you can to plan ahead.
There has recently been some very unsettling data released regarding middle-income baby boomer retirement care preparedness. A study conducted by The Blackstone Group, an independent research firm, on behalf of Bankers Life Center for a Secure Retirement, forecast that 79% of middle-income baby boomers have NO savings put aside to cover their retirement care.
Couple this disaster savings scenario with the US government’s admission that for the first time since 1982 Social Security trust funds are being used to pay current benefits to recipients and Medicare’s reserves are being used to cover the costs of that program as well. It is the perfect storm of a looming retirement insolvency crisis.
Diving into The Data of Retirement Care Preparedness
Middle-income baby boomers for this study are defined as aged 53 to 72 with an annual income of $30,000 to $100,000 and less than one million dollars in investable assets. For those baby boomers in this demographic:
- a mere 4% of them have more than $100,000 saved for health care retirement planning, long term care, and general retirement preparedness
- while 65% of these survey respondents prefer to receive retirement care in their current homes only 55% of them expected to be able to do so, and there is a disconnect at what age these care services will be required
- a full 45% thought that assisted living circumstances would be needed between the ages of 71 and 80 while 37% said it would be between the ages of 81 and 90
The problem with these hopes is the ever-increasing presence of Alzheimer’s and other forms of dementia which can push retirees younger than ever into the need for assisted living and retirement care.
How People View the Need to Prepare for Retirement Care
Dangerous misperceptions about how much retirement care costs and how to pay for it exist. It may seem incredible, but the truth is that baby boomers are better prepared to die than to live.
- 40% of those surveyed consider retirement care planning to be a low priority or not one at all
- 42% thought it to be a medium priority
- and only 18% identified retirement care planning as a high or very high priority
Incredibly 56% expected that Medicare would pay for retirement care as needed, including long-term care needs which Medicare does not cover. The costs of long-term care policies are cited as the biggest reason for not making the prudent insurance purchase.
Among middle-income baby boomers, 81% have formally made at least one preparation for when they pass away, usually in the form of a will or trust, while only 32% have a plan as to how they will receive retirement health care should it become necessary.
Baby Boomers Need to Address Their Underfunded Retirement Plans
The message is unmistakable; middle-income baby boomers need to address their underfunded retirement plans pronto. There is an overconfidence in this demographic that allows them to think they will be able to manage their and their spouse’s healthcare costs as they continue to age.
The reality is that many of them are one bear stock market or health care crisis away from disaster. The federal government and its programs are just as unlikely to be able to stave off the financial crisis brought about by this willful ignorance of the costs of aging successfully.
If you are in these incomes and age brackets, it is time to take a realistic look at what you can do to better prepare yourself for the coming years ahead. Being financially unprepared to age brings stress and family discord at a time when you should be living your best life. Be proactive, contact our office today and schedule an appointment to discuss how we can help you with your planning.
If you have questions or need guidance in your planning or planning for a loved one, please do not hesitate to contact our office at (513) 771-2444.