No one could have predicted that Judy and David Konczak would retire with so little money that they would be unable to leave their children for more than a pittance.
Both are university graduates. David, 84, has a successful business that allowed Judy to quit her job as a teacher and stay with her to raise their two children. They traveled, owned a car and a home, sent two children to college, and saved for retirement.
“Even if I was in a wheelchair, I was going to spend my golden years sitting on the beach in Hawaii with my Mai Tais,” said Judy Konczak, 83.
Instead, her husband suffered a stroke, surgery, and prostate cancer, all of which depleted their savings.
Now, she’s back to work part-time, making about $15 an hour, selling items on a marketplace “for pennies on the dollar,” and starting work with nonprofit organizations. Advanced sourcesis in Dallas trying to find help to pay the bills.
With all her savings gone, she believes “the house” is the only thing left for her children, and “I won’t know if they want it until the repairs are completed.” I don’t know what they can get out of it. ”
Medical care or inheritance?
If it sounds familiar that the Konchaks are struggling with medical costs as they age, that’s because they are. Even with insurance, Americans struggle to pay costs such as premiums, copays, coinsurance, and non-covered medical services.
As a result, the large wealth transfers researchers predict from baby boomers to younger generations may not be so large after all, as more of older Americans’ money goes toward health care. .
“One of the biggest drivers of reduced wealth in retirement is medical costs, including increased out-of-pocket costs and the possibility of needing long-term care later in life.” George Shine wrote, Technical Director, Advanced Consulting Group, in a Nationwide Retirement Institute research report. “The expected transfer of accumulated wealth from boomer parents to millennial and Gen X children may end up in the health care system.”
One-third of Medicare beneficiaries, including more than half of those under 65, said they could not afford their health care costs. According to a survey The survey of 7,873 adults from April to July last year was conducted by the Commonwealth Fund, a nonprofit organization focused on health care issues. More than 20% of Americans, including more than 40% of those under 65, said medical costs are making it difficult to pay for food and utilities. And they have delayed or omitted needed care.
Kathy Kiersted, 64, said she and her husband Jose, 62, who live in Arizona, pay more than $1,500 a month in medical insurance premiums. She was fired from Amazon and her Health Insurance Marketplace policy was even more expensive, so she had to purchase COBRA (Consolidated Omnibus Budget Reconciliation Act) insurance.
“I talked to a broker, and the cost was comparable to COBRA, but the deductible was much higher,” she said. “I really don’t know how people pay for health care. It’s almost better to have nothing and get access health care,” she said, adding that very low incomes can cover almost all costs. He mentioned Arizona’s Medicaid program.
Kirstead consults part-time to help with medical costs. She believes her age has prevented her from finding full-time work. Her daughter is getting married soon, but she won’t be able to pay for the wedding.
“She understands, but as a mother, it’s heartbreaking,” she said.
“We’re middle class and above middle class,” Kiersted said. “We pay our bills and have a little extra, but we’re all spending so much on health care that we’re not in a position to help our kids or leave money behind.”
Mr. Konchak of Texas points to the cumulative cost of small-denomination bills.
Her out-of-pocket costs can add up quickly, too, she says, “even if it’s just $20 each time you go to different places like occupational therapy, physical therapy, oncologist, etc.” Medicare also doesn’t cover dental or vision, so you’ll have to pay for these out-of-pocket.
“All seniors need glasses,” she said. “And dentistry.”
Dispelling the myth of “huge wealth transfers”
Because all baby boomers (born between 1946 and 1964) will be at least 65 years old by 2030 and will own 52.8% of the country’s wealth, researchers believe that large intergenerational wealth transfers will occur. is expected to occur. 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 that amount. Approximately $12 trillion is expected to be donated to charity.
Most Millennials expect to inherit at least $350,000 from their parents and other family members. shine of Advanced Consulting Group wrote in a research report for the Nationwide Retirement Institute.
But more than 25% of Americans believe paying for long-term care will reduce their children’s inheritance, according to a 2023 national retirement survey of 1,439 baby boomers, Gen Xers, and Millennials. This was revealed in a survey by the association.
How much will medical expenses cost?
Since 2000, inflation-adjusted prices for health care, including services provided, insurance, drugs and medical devices, have increased by more than 114%, accounting for 81% of overall price increases, nonprofit medical researchers say. Stated. KFF said.
The annual per-person cost of home care in 2021 averaged about $42,000 (for 30 hours of care per week at $27 per hour), more than 20% higher than in 2019. AARP said. The average annual cost of nursing home care for him in a private room is more than $108,000, which is more than double her average annual income for someone over 65.
And as life expectancy increases, people will have more assets in retirement to pay for medical expenses and insurance premiums.
According to Josh Gordon, director of health policy at the Committee for Responsible Persons, 60% of health care costs are incurred after the age of 65, and people 85 and older spend three times more on health care than those aged 65 to 75. He says he is using the service. Federal budget, nonprofit public policy organization.
Can people avoid bankruptcy to leave behind a legacy?
If you’re still in your 50s and in good health, you may be able to purchase long-term care insurance to help alleviate some of the most expensive medical costs, says Justin Silvers, financial advisor and founding attorney at Stivers Law Firm. says. If you are older than that, the price may be too high.
Chad Dolbenga, CEO of insurance brokerage firm CBS Brokerage, said pensions can be used to provide reliable income about six to 10 years before retirement. Annuities can provide additional monthly income after retirement.
From there, the only options are Medicare or self-pay, and many baby boomers like Konczak and Kirstedt have already ended up there.
Medicaid for low-income people covers almost everything, including long-term care, and in some cases dental and vision. Each state has its own rules regarding eligibility and coverage.
“It’s very sad…unless you’re in a place where everything is free or you have the money to pay,” Kiersted said. “But we’re stuck in the middle. There’s no middle class, it’s either the upper class or the lower class.”
Children of wealthy families will have money from this intergenerational transfer of wealth, but “it belongs to the upper classes and is no longer for all classes.” she says.
If you have time, plan ahead.Time to have the “talk”: How seniors can avoid financial ruin by making long-term health care plans now.
What are people supposed to do if they are already backed into a corner?
In addition to part-time work, Konchak’s 24-year-old grandson has moved in, paying modest rent and helping care for his grandfather.. Konchak has already sold her car and is selling old dishes inherited from her mother and items from her husband’s now-closed shop. She did not rule out having to sell the jewelry.
“I don’t want to sell jewelry,” she said. “I never dreamed I’d have to do that, but I might have to. There’s only so much money coming in, so I’ve used up my nest egg.”
Meanwhile, Kirsted said, “I’m so depressed that I can’t even plan that far ahead. For both of us, medical bills are the biggest stressor financially. I’m grateful to be careful right now.” But I’m worried about the future.”
Medora Lee is USA TODAY’s money, markets and personal finance reporter. Contact [email protected]. Subscribe to the free Daily Money newsletter Get personal finance tips and business news every Monday through Friday.
