No one would have guessed that in retirement, Judi and David Koncak would be almost penniless and unable to leave their children much more than a pittance.
Both are university graduates. David, 84, had a successful business that allowed Judi to stop teaching to stay home and raise their two children. They traveled, owned cars and a house, sent their two children to college, and saved for retirement.
I thought we would spend our golden years sitting on a beach in Hawaii with Mai Tais, albeit in a wheelchair, said Judi Koncak, 83.
Instead, her husband suffered a stroke, surgeries and prostate cancer, all of which helped drain her savings and more.
Now she’s back to work part-time making about $15 an hour, selling items on Marketplace for pennies on the dollar and turning to the nonprofit The Senior Source in Dallas for help paying her bills .
With all her savings gone, she suspects her house is all she has left for her kids, and she’s not even sure until we get the repairs done if they don’t even want them. Whatever they can get out of it, I don’t know.
Healthcare or inheritance?
If the Koncaks struggle with health care costs as older adults seem familiar, that’s because they are. Even with insurance, Americans struggle to pay for expenses such as premiums, copayments, coinsurance and non-covered health services.
As a result, the significant transfer of wealth from baby boomers to younger generations that researchers have predicted may not be so great after all, since much of older Americans’ money goes to health care .
“One of the biggest factors leading to wealth depletion in retirement is health care costs, including increased out-of-pocket costs for medical treatment and the likelihood of needing long-term care later in life. life, wrote George Schein, CTO of Advanced Consulting Group, in a research report from the Nationwide Retirement Institute The expected transfer of accumulated wealth from boomer parents to their millennial and Gen-X children may end finally to the medical system.
A third of Medicare beneficiaries, including more than half under the age of 65, said it was difficult to pay for health care, according to a survey of 7,873 adults conducted from April to July last year by the Commonwealth Fund, a non-profit organization focused on health issues. More than 20%, including more than 40% of those under 65, said health care costs made it difficult for them to pay for food and utilities. And they have delayed or skipped the necessary care.
Kathy Kiersted, 64, said she and her husband, Jose, 62, who live in Arizona, pay more than $1,500 a month in health care premiums. She was fired from Amazon and had to buy COBRA (Consolidated Omnibus Budget Reconciliation Act) insurance because policies on the health insurance marketplace were even more expensive.
“I even talked to brokers, but the costs were comparable to COBRA but with much higher deductibles,” he said. “I really don’t know how people afford health care. It’s almost better to have nothing and have access to health care,” he said, referring to Arizona’s Medicaid program, which pays for almost everything if you have very low income.
Kiersted consults part-time to help pay for health care. He has not been able to find full-time work, he believes, because of his age. His daughter is getting married soon, but he won’t be able to help pay for the wedding.
She knows, but as a mother, it’s heartbreaking, she said.
They were middle class and upper-middle class, Kiersted said. We pay our bills and have a little extra, but we were all spending so much on health care (so) that they weren’t in a position to help or leave money for the kids.
Koncak, from Texas, points to the cumulative cost of small bills.
Co-pays, even just $20 each time, because we go to so many different things, occupational therapy, physical therapy, oncologist, add up quickly, too, she said. Medicare also doesn’t cover dental or vision, so these are out-of-pocket expenses.
All seniors need glasses, he said. And dental
Dispel the myth of the great transfer of wealth
With all baby boomers (born between 1946 and 1964) who will be at least 65 years old by 2030 and own 52.8% of this country’s wealth, researchers expect a large generational wealth transfer of up to $84 trillion in assets over the next 20 years.
Generation X (1965-1980), Millennials (1981-1996) and Generation Z (1997-2012) are expected to inherit $72 trillion of this amount. About $12 trillion is expected to go to charities.
Most millennials expect to inherit at least $350,000 from their parents or other family members, Schein of the Advanced Consulting Group wrote in the Nationwide Retirement Institute research report.
But more than 25 percent of Americans believe paying for long-term care will decrease their children’s inheritance, a 2023 Nationwide Retirement Institute survey of 1,439 boomers, Gen Xers and millennials showed.
How expensive is healthcare?
Since 2000, the inflation-adjusted price of health care, including services provided, insurance, drugs and medical equipment, has increased more than 114%, outpacing the 81% increase in overall prices , said nonprofit health researcher KFF.
On average, the annual cost per person of home care in 2021 was approximately $42,000 (for 30 hours of care per week at $27 per hour), more than 20% higher than in 2019, it say AARP. The average annual cost of nursing home care is more than $108,000 for a private room, more than double the typical annual income of people 65 and older.
And with longer life expectancies, an even greater amount of retirees’ assets will go toward paying for health care and insurance premiums.
Sixty percent of health care costs occur after age 65, and if you’re over 85, you use three times as many health care services as people between the ages of 65 and 75, said Josh Gordon, director of policy of the Committee for a Responsible Federal Budget. , a nonprofit public policy organization.
Can people avoid going broke to leave a legacy?
If you’re still in your 50s and fairly healthy, you may be able to buy long-term care insurance to help mitigate the costliest health care expense, said Justin Stivers, a financial advisor and founding attorney at Stivers Law. If you are older than that, it may be too expensive.
About six to 10 years before retirement, you might want to explore guaranteed income through an annuity, said Chad Druvenga, chief executive of insurance brokerage firm CBS Brokerage. An annuity could provide additional monthly income during retirement.
From there, you’ll only have Medicare or self-pay options, which is where many boomers like Koncak and Kiersted have already ended up.
Medicaid for low-income people would cover almost everything, including long-term care and, in some cases, even dental and vision. Each state has its own eligibility and coverage rules.
It’s so sad … unless you’re in a place where everything is free or you have money to pay, Kiersted said. But they were stuck in the middle. There is no middle class, either upper class or lower class.
Kids from high-net-worth families will come out of this generational wealth transfer with money, but that’s an upper-class thing, no longer allowed across classes, he said.
Plan ahead if you have time:It’s Time to Talk: How Seniors Can Avoid Financial Ruin by Planning Now for Long-Term Health Care
What’s left for people to do if they’re already tied up?
In addition to working part-time, the Koncak’s 24-year-old grandson settled in, pays modest rent and helps with his grandfather’s care.. Koncak already sold her car and has been selling her mother’s old dishes and things from her husband’s closed business. He has not ruled out that he has to sell his jewelry.
I don’t want to sell my jewelry, she said. I never dreamed I would have to do this, but maybe I should. We just have so much money coming in and we’ve exhausted our nest egg.
Meanwhile, Kiersted said I can’t even plan that far ahead because it’s so depressing. Health care is the biggest financial strain for both. I was grateful to be able to take care of us now, but the future scares me.
Medora Lee is a money, markets and personal finance reporter for USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news Monday through Friday.
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