Sometimes I Feel Like a Piece of Bologna

Sunday, October 15, 2006

Are You Counting on a Windfall Inheritance?

Over recent years, there’s been a lot of talk about the Baby Boomer generation inheriting a huge windfall. According to an article in the Insurance Journal in 2004, the 76 million boomers were predicted to inherit $40.6 trillion by 2052.

However, according to several studies reported by New York Life, Boomers will inherit far less than predicted. There are several reasons for this:
  • Our parents are living longer and spending more of their resources on long term and medical care.

  • The recently poor economy has savings.

  • Baby Boomers have more siblings, meaning there are more people to spread the remaining wealth among.

  • We’ve certainly been experiencing the first reason. For years, I told my mom to not worry. They had enough to live comfortably for the rest of their lives. Then my step dad went into the nursing home and suddenly we were spending $2000 to $3000 per month over and above what their long-term care insurance paid. Watching the savings drain was like a loud sucking sound. Add to that CD rates of under 2% for a couple of years and the dollars disappeared quickly. We’ve been able to stem some of that drain by moving him to an excellent board and care home, but the concerns remain. He could return to nursing home care any day. And Mom could just as suddenly need care. Now we aren’t so sure how long their savings will last.

    So even as we’re managing the needs and perhaps finances of our parents, we also need to be planning for our own retirement. We need to be faithful in contributing to our retirement accounts rather than counting on Social Security that probably won’t be there. And we need to consider long-term care insurance. The New York Life article suggests several important ways we can plan ahead responsibly.

    It’s important that we do that so that we don’t burden our children—a generation that has far fewer workers than the Boomer generation.

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