“Life Is What Happens to You While You’re Busy Making Other Plans” (John Lennon): Part II

In “Counting on an Inheritance?  Count Again” the June 11, 2012 Wall Street Journal documents trends that are becoming all too familiar to Baby Boomers.  First, their parents are living longer. “How much longer?” the article asks. “Thanks to medical gains, a 65-year-old man has a 60% chance of living to age 80 and a 40% chance of reaching 85. For women, the odds are 71% and 53%, respectively.”  Therefore, Mom & Dad are much more likely to spend your inheritance simply to make ends meet as they age. 

 AND if you add in the cost of long-term care, which 75% of Americans over age 65 are likely to need, you might as well bid fond farewell to that lump sum you were planning on after both parents pass. 

Second, just like the Boomers, their parents have seen their investments shrink substantially in the past few years – which will lead to an even smaller inheritance for the children.  In fact, the Boomers may find themselves pitching in to help support Mom & Dad!  According to a recent study from Northwestern Mutual Life Insurance Co. in Milwaukee, the WSJ article notes, “…when asked how prepared they feel to live to various ages, one in three surveyed adults age 60-plus said they didn’t feel prepared financially to live to age 85.”  And, sadly, many Boomers avoid such discussions with their parents – until it is too late.

 On the positive side, the Wall Street Journal notes that some financial advisors are recommending (FINALLY!!!) that Boomers help their parents pay for long-term care insurance (LTCi) premiums to defray potentially catastrophic costs as they age.  The lack of these policies can lead to family squabbles about the quality of care that Mom & Dad need and their cost.  Of course, any Boomers who have to struggle with this dilemma should certainly consider LTCi for themselves to capture insurability and low premiums while they are still healthy and spare their own children future headaches.