A recent Wall Street Journal MarketWatch article raises some interesting points about the baby boomer generation and how their impending retirement is changing the country. Whether you are a baby boomer yourself or have aging parents who are nearing retirement age, you may want to rethink some of the assumptions you have about this generation and how their transition into old age will affect you, your family, and the nation at large.
Inheritances may not be what you want them to be.
According to a 2012 survey, boomers place a relatively low priority on being able to pass their children a strong inheritance. When surveyed, about half of baby boomers with more than $3 million in assets said that they wanted to leave inheritances to their children, while the other half said it wasn’t important to do so. That’s a significant change from earlier generations where leaving inheritances was something three-quarters of them intended to do.
Additionally, some inheritances that boomers are planning on leaving come with significant restrictions. 70% of those who have created trusts to manage their inheritances say their children don’t have the ability to manage the money they stand to inherit. These people create trusts that impose significant limits on when and how their children can inherit the money.
Elder care expenses will be much higher than you think.
A survey from 2011 shows that people between the ages of 50 and 65 don’t believe they will experience a significant decrease in their health after they retire. Only about 13% say that they will experience a health decline after retirement, even though the reality is that nearly 40% of retired seniors say their health has become worse since they left the workforce.
Because of that disparity between expectations and reality, many boomers are unprepared for the costs and changes in lifestyle that come with changes in health. Not only are they not planning on making changes to their lifestyle or their living areas, many are not prepared to pay for the significant costs that accompany eldercare.
Boomer divorce rates are going up.
Even if baby boomers have an estate plan, such plans can take a big hit when a couple decides to get divorced. Though divorce rates have steadied over the past decade, the number of baby boomers who are getting divorced as they reach retirement age has increased significantly. About 600,000 people age 50 and older got divorced in 2009, and by 2030 that number is expected to be as high as 800,000.
This surge in senior divorces complicates retirement planning, estate planning, and a number of other issues relevant to both the baby boomers and their families.