PenPenWrites

We Baby Boomers have been financially favored. A good number of us rode a rocketing stock market and rewarding jobs to ultra-healthy investment portfolios. The eventual transfer of those assets to our grown children–spoiler alert: we won’t live forever–is the stuff of media chatter about the $100 trillion in wealth we’re likely to fork over to our heirs over the course of the next two decades. It’s being called The Great Wealth Transfer.

But is it? What this hoopla doesn’t take into account is that we upper-middle-class boomers who’ve accumulated our tiny piece of these trillions of dollars of wealth are living long lives.

• Those of us who are already 65 have an average life expectancy of more than 86.
• For a 65-year-old couple, there’s a 64 percent chance that at least one partner will live beyond 90.
• For many of us, retirement can last three decades or more.

All of which means that the pleasure of leaving our kids and grandkids a financial bonus is giving way to fear of outliving our assets. That’s because growing old and fragile doesn’t come cheap.

Here’s what financial advisers have to say:

• One of the biggest factors that drives wealth depletion during retirement is health care costs, including rising out-of-pocket costs for medical treatment and the probability of needing long-term care later in life.
• These potentially high expenses increase the likelihood that most of our their savings would be wiped out during their lifetime, leaving little or nothing to transfer to their children or other beneficiaries.

The projections on the likelihood of being faced with these costs go like this:

• Women vs. Men: Women have a higher probability of needing care (57 percent by age 85) compared to men.
• Average Duration: The average person needs care for roughly 2.5 to 3.6 years, but 22 percent of adults will need care for more than five years

When I previously posted about this issue, I wrote from personal experience of how jarringly expensive it was to care for an infirm spouse. This is especially true when a loved one suffers from one of the big three causes of debilitation among the elderly: stroke, dementia, Parkinsons. The costs of care vary, depending, of course, on the extent of care needs and local costs of that care. But I can tell you, the costs I incurred (I needed around-the-clock non-medical care for my spouse) could wipe out $1 million in savings in a flash of three or four years.

Congress continues to hold hearings on the “financial risk to every individual’s retirement income security posed by long-term care needs.” Thus spaketh Senator Charles Grassley when he chaired a hearing to identify steps to help Americans better prepare. The consensus, certainly among those in power at the present moment, is that we holders of a piece of that trillion-dollar portfolio should save more. But the question is: How much is enough?

Painting: Pierre Bonnard, “Dining Room in the Country”