Boomers Enjoying Wealth Surge - May Get Drained by Long-Term Care Costs

Boomers are experiencing a significant wealth surge, enjoying greater financial prosperity in their later years. However, this financial upswing could be quickly depleted by the escalating costs of long-term care.

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Boomers Enjoying Wealth Surge - May Get Drained by Long-Term Care Costs
4 Min Read December 21st, 2023

Baby boomers, the generation born between 1946 and 1964, are not just enjoying sunset strolls and grandkids. They're also amassing wealth at an unprecedented rate. According to a recent analysis by the Federal Reserve, their net worth has skyrocketed by a staggering $14 trillion since the end of 2019. This translates to a median wealth of $278,000 per household, more than double the national average.

This financial surge is driven by several factors. The rising stock market, fueled by pandemic-era stimulus and low-interest rates, has significantly boosted the value of their investments. Additionally, boomers are nearing retirement, often with accumulated savings and paid-off mortgages, contributing to their robust financial position.

But the story doesn't end there. Americans over 70 hold more than 30% of the country's wealth even though they account for 11% of the population, a figure that has been steadily climbing for decades. 

Will Inheritances Be There?

This concentration of wealth within a single generation raises concerns about the potential economic impact of their eventual spending down. Based on the Federal Reserve data, Americans over 60 hold more than half of the nation's wealth, amounting to around $96 trillion. That is a lot of money.

The influx of wealth among boomers also presents opportunities. It can fuel charitable giving, new business investments, and increased demand for goods and services geared toward older demographics. Additionally, the transfer of wealth from boomers to subsequent generations through inheritance or support could potentially benefit their adult children and grandchildren.

However, due to longevity and the impact of future long-term care, some of this wealth may never be seen by other generations. Finance writer Ann Logue wrote in Business Insider that older generations are spending some of their money on themselves, including long-term care costs and increasing cost of living, without leaving much left over for their children.

Instead of an inheritance boom, the reality is that most Americans will not receive a vast fortune to ameliorate their grief.

For those anticipating an inheritance, their boomer parents may not have as much to leave behind as they initially thought. Long-term care costs are rising quickly due to increasing demand for care, higher labor costs, and other inflationary pressures. Since about half of those who reach age 65 will require some long-term care, according to the U.S. Department of Health and Human Services research, a lot of money will be spent on long-term care. 

Health Insurance and Medicare are Not Answers for Long-Term Care

Many people realize too late that traditional health insurance and Medicare provide minimal coverage for skilled long-term care and offer no support for 'custodial care,' such as assistance with daily living activities or dementia supervision, which most will eventually need. Medicaid only covers long-term care for those with minimal income or assets. Long-Term Care Insurance, which must be bought when younger and healthier, covers these costs, but it's often not an option for many older adults. 

Consequently, these individuals end up spending their savings on long-term care, which diminishes their legacy and impacts their lifestyle during their remaining years.

The LTC NEWS Cost of Care Calculator illustrates the varying care costs based on location. Nationally, a 40-hour-per-week home health aide averages $4,797 monthly. The average monthly base cost for assisted living is $4,261, excluding surcharges. Meanwhile, an average private room in a nursing home costs over $9,093 per month.

Long-Term Care Insurance premiums are very affordable for many Americans if you are in your 40s or 50s. However, there are options if you are in your 60s and in good health. These options are more limited and costly for those in their 70s but are available, including hybrid policies that include death benefits and short-term cash indemnity policies. 

All too often, families ignore aging and the consequences of long-term care. Today, more people are aware of Long-Term Care Insurance options and take advantage of protecting their 401(k)s and other assets by adding an LTC policy to their retirement plan. That LTC policy will help ensure access to choice of quality care, including in-home care, safeguarding investments, and reducing the stress and burdens placed on loved ones. 

Careful planning for older adults and those still in their working years, including a family discussion of long-term care, will reduce the anxiety and help ensure that some of this wealth transfer ends up for loved ones instead of being spent for long-term care. 

LTC Insurance can be a big part of the answer to protecting these assets. Every insurance company and product type has varying underwriting rules. 

Underwriting Can Affect Ability to Get LTC Policy

Traditional Long-Term Care Insurance is the most conservative from an underwriting standpoint but the option most people consider. Partnership policies add an additional layer of asset protection. Asset-based 'hybrid' policies combine life insurance or annuities with long-term care benefits. Some of these hybrid plans are a bit more lenient with underwriting. However, they can be expensive but include a death benefit. Then, short-term cash indemnity policies have become more popular, providing needed cash benefits with broader underwriting rules. 

There is a lot to navigate depending on your age, health, and other factors. Be sure to seek help from a qualified independent Long-Term Care Insurance specialist who represents the top-rated insurance companies to help match you with the best options. 

Preparing in advance for long-term care offers you and your family a wider range of choices. As the American population ages, the issue of long-term care becomes more pressing. The question arises: will families be able to preserve their legacy, or will it be consumed by care costs? Beyond the financial aspect, the responsibility of long-term care heavily affects adult children and their families, with the impact being more severe in the absence of prior planning or conversation.

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About the Author

An LTC News author focusing on long-term care and aging.

LTC News Contributor James Kelly

James Kelly

Contributor since August 21st, 2017

Editor's Note

The various options and complex details involved in selecting the appropriate Long-Term Care Insurance can be challenging. Consulting with a Long-Term Care Insurance expert can be immensely beneficial in such situations.

An LTC Insurance specialist understands the nuances of how premiums differ across companies based on age and health. Working with a specialist who represents multiple top-rated insurance companies can assist in finding a plan tailored to your specific needs.

You will want accurate quotes from all the top insurance companies, including the various policy options, and an LTC Insurance specialist will provide that so you can easily shop for and design an affordable plan.

LTC NEWS Resource's Hub Has What You Need

LTC NEWS has numerous tools and resources to guide you through all aspects of long-term care planning. 

Here are a few of the resources available on LTC NEWS:

Finding Quality Care for Mom or Dad

LTC NEWS offers help for you and your family in many ways. The LTC NEWS Caregiver Directory is an excellent resource where you can find the most comprehensive directory of all types of long-term care services no matter where your loved one lives - Long-Term Care Services Directory | Find Care Near You.

If your loved one has an LTC Insurance policy, that will open the door to many quality care options, as one of the first questions most home health agencies and long-term care facilities will ask you is if the care recipient has an LTC policy.

Be sure to use the benefits from a loved one's LTC policy; trying to save them for later is not a good approach since access to quality care improves a person's quality of life immediately.

LTC NEWS has combined efforts with Amada Senior Care, a leading in-home health care agency with locations throughout the country, to help you process a claim from any LTC Insurance policy.

There is no cost or obligation for this service - Filing a Long-Term Care Insurance Claim

If they don't have an LTC policy, Amada can still help develop a plan of care and provide you with many affordable in-home care options. 

Learn more now - Find Quality In-Home Care.

These four LTC NEWS guides will assist you in trying to find appropriate long-term health care services for a loved one:

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