Boomers at 65: Wealthier, Healthier, but Facing Long-Term Care Challenges

This year marks a demographic milestone in the United States: a record-breaking 4.1 million Americans will turn 65. This silver tsunami is ushering in the largest wave of retirees in history. While this generation, often referred to as the Baby Boomers, is wealthier and healthier than previous generations, their longevity also presents significant challenges, particularly regarding long-term care needs.

The Late-Boomers, the younger end of the Boomer generation, and Generation X are marching to old age. The consequences of aging, retirement planning, and long-term care will significantly impact American families and finances. 

A Wealthier Generation

Boomers entered their prime earning years during a period of economic prosperity, accumulating significant wealth compared to past generations. According to a 2023 report by the Pew Research Center, the median net worth of households headed by individuals aged 56 to 74 is $236,400, nearly double that of Gen X households in the same age group. 

Federal Reserve statistics indicate that the median net worth for Americans in their late 60s to early 70s is $266,400, with the average net worth in this age group reaching $1,217,700. However, due to the way averages can be influenced by households with very high net worths, the median provides a more accurate representation of typical net worth.

Although $266,400 might initially appear substantial, individuals in their 60s often begin to draw from their net worth to support their retirement living expenses. 

Improved Health, Longer Lifespan

Advances in medical science have contributed to increased life expectancy for Boomers. The Centers for Disease Control and Prevention (CDC) reports that the average life expectancy at age 65 in the United States is now 20.6 years for men and 22.8 years for women. 

Increased life expectancy has obvious advantages, but many families often do not consider how to fund retirement and the consequences of aging. 

The Long-Term Care Conundrum

Despite their wealth and improved health, many Boomers will face challenges with long-term care as they age. Federal data shows that about half of people aged 65 and older will require some form of long-term care in their lifetime. Common sense tells us that long-term care has become a big risk that needs to be addressed.

The cost of long-term care can be substantial, placing a significant financial burden on individuals and families. According to the LTC NEWS Cost of Care Calculator, the national median annual cost of in-home care, based on a 44-hour week, is now $58,629. The median base cost of assisted living is $52,082 a year, while nursing homes average over $111,000 annually.

If the money is unavailable and there is no Long-Term Care Insurance, many adult children, frequently daughters, find themselves in the demanding position of adding 'caregiver' to their already full list of responsibilities, including being a wife, mother, and career professional. 

This role expansion often occurs without warning, thrusting them into the complex world of eldercare while they are still managing their own household and professional obligations. The pressure to provide compassionate care for aging parents while balancing work deadlines and family needs can lead to significant stress and emotional strain. 

For these women, the challenge is not only in the physical tasks of caregiving but also in navigating the emotional complexities of role reversal and the guilt associated with feeling spread too thin across their many duties. 

Wealth Transfer vs. Long-Term Care Costs

While Boomers may be transferring wealth to their children and grandchildren, a portion of these funds are often diverted toward covering long-term care expenses. The impact could affect younger generations' financial security and limit their wealth accumulation.

For example, a 55-year-old today could expect to pay $350,000 or more for care when they reach 80. Some age issues, like dementia, could require even more care and come with higher costs. For a couple that both need care, the costs could be devastating.

Long-Term Care Insurance: An Affordable Solution

Long-Term Care Insurance can reduce the financial burden of long-term care needs and ease the physical and emotional burden on loved ones. However, many Americans don't have an LTC policy in place. 

You may believe you're capable of caring for your spouse or assume your children will take over when needed. Cassandra Watson, an expert in Long-Term Care Insurance and President at Platinum LTC Solutions, notes that she has encountered such assumptions periodically throughout her career.

Throughout my time as a Long-Term Care specialist, people have occasionally expressed that a child or a spouse will care for them. In turn, spouses and children agree, saying they want to take care of their parents/partners. So why consider insurance? Because the two aren't mutually exclusive—we can have coverage, and our families can (and likely will) be involved no matter what.

Watson says having an LTC policy protects the family. 

It protects them from taking on too much, either physically, financially or emotionally.

She says an LTC policy is a tool people provide for their family members to make things easier. 

Getting the insurance requires thinking ahead so you can get the right tools in place for your family.

Some individuals, due to poor health, face difficulties in securing a Long-Term Care policy because of medical underwriting requirements. Yet, many people can access affordable options, albeit with escalating costs, the longer you delay acquiring a policy. For instance, a person at 50 will incur lower premiums than someone at 65. The paramount issue, however, is health status. Securing a policy while still insurable is crucial for effectively preparing for the future costs and burdens associated with long-term care.

• Long-Term Care Insurance Cost: Factors, Considerations and Price Ranges

Premiums are intended to remain level based on the age you are when you acquire a policy. Several types of policies are available, including those with death benefits and partnership policies that provide additional dollar-for-dollar asset protection.

The Road Ahead

As the Boomer generation ages, addressing the growing need for affordable and accessible long-term care services will be crucial. This will require innovative solutions, including encouraging greater participation in Long-Term Care Insurance, exploring alternative care models, and considering policy changes to support long-term care financing.

If you or a loved one is in their 60s or 70s now and has not considered the impact of long-term care, that conversation needs to happen without delay. If you are in your 40s or 50s, be sure to secure an LTC policy now when premiums are low, and your health allows for the most available options. 

By acknowledging the challenges and exploring potential solutions, we can ensure that this generation of healthy and well-off individuals can age with dignity and financial security.