Page 1

Baby Boomer Generation Largely Unprepared for Retirement

Roy W. Litherland www.attorneyoffice.com 1 http://www.attorneyoffice.com February 2013


Baby Boomer Generation Largely Unprepared for Retirement One of the most poignant demographic trends that we are seeing in the United States today is the rapid aging of the population. This is due to the fact that members of the baby boomer generation are starting to enter their senior years. "Baby boomers" are Americans who were born between 1946 and 1964, and there are approximately 77 million baby boomers in the United States. This is

The average benefit for a single individual in 2013

resulting in approximately 10,000 people applying for Social Security every day.

Can You Retire Comfortably on Social Security Alone?

is estimated at $1,261 per month. The average benefit for an eligible couple is

While it is true that the vast majority of senior citizens are going to be collecting Social Security benefits when they reach the age of eligibility, Social Security payouts are modest. The average benefit for a single individual in 2013 is estimated at $1,261 per month. The average benefit for an eligible couple is $2,048.

$2,048. This type of money is not going to finance a truly

Many people have rather lofty retirement goals, envisioning a life of leisure and travel. When you look at these average monthly benefits, you can see that this type of money is not going to finance a truly comfortable retirement.

comfortable retirement.

Even those who receive more than the average are not going to be able to enjoy true financial freedom. The maximum monthly Social Security benefit in 2013 for a single retiree is just $2,533 per month. In spite of the limitations of Social Security, according to the Social Security Administration 74% of single people who are enrolled in the program rely on Social Security for most of their income. 53% of married senior couples derive more than 50% of their income from Social Security. http://www.attorneyoffice.com

2


46% of single senior citizens rely on Social Security for at least 90% of their income, and this is true for 23% of the married couples who are receiving Social Security benefits.

Many Boomers Polled Not Confident There have been several studies conducted recently in an attempt to measure the retirement preparedness of baby boomers. One of them was conducted by the Associated Press in partnership with the popular website LifeGoesStrong.com. Some 44% of the baby boomers polled stated that they were not confident they would have the financial resources that they needed to enjoy a comfortable retirement. A similar poll was conducted by the Insured Retirement Institute, which is a nonprofit organization serving the insurance industry. This poll involved 803 people between the ages of 50 and 66. Only 40% of the people who participated said that they were extremely confident that they would be able to retire comfortably. Two thirds of the respondents to the Insured Retirement Institute's poll said that they were not confident about their ability to handle all of the medical expenses that they anticipated during retirement. 75% of them did not feel as though they were prepared to address potential long-term care costs that they may incur at some point in the future.

Long-Term Care Costs Law Office of Roy W.

According to the United States Department of Health and Human Services,

Litherland

once you reach the age of 65 there is a four out of ten chance that you will

3425 S. Bascom Ave, Ste .

require a stay in a nursing home at some point in the future.

240, Campbell, CA 95008 408-356-9200 roy@attorneyoffice.com

Most people who reach this age will need some type of living assistance eventually.

http://www.attorneyoffice.com

3


Each year the MetLife Mature Market Institute puts out a survey on the current state of long-term care costs. In 2012, the average annual expense for a semiprivate room in a nursing home in the United States was just over $81,000. A private room averaged $90,520 annually.

Many baby

The U.S. Department of Health and Human Services tells us that 10% of people who need nursing home care will stay in the nursing home for at least five

boomers have not

years.

planned ahead appropriately and they may be forced to pay a hefty price.

Will Medicare Pay for Long-Term Care? Medicare will certainly be of great assistance to baby boomers who need medical treatment as senior citizens. However, this program is not set up to pay for an extended stay in a nursing home or assisted living community.

Are There Other Options? Though Medicare won't pay for long-term care, Medicaid (which is called Medi-Cal in California) will in fact pay these expenses if you can obtain eligibility for the program. There is an upper asset limit of $2,000 that you must stay within, but everything that you own does not count toward this limit. Your home (up to a 2013 maximum equity limit of $802,000 in states with high property values such as California), certain personal possessions and your vehicle are not considered to be countable by the Medicaid program. And, the healthy or “community spouse� may keep half of shared assets up to a maximum of $115,920 in 2013.

Law Office of Roy W. Litherland 3425 S. Bascom Ave, Ste . 240, Campbell, CA 95008

Conclusion When you look at all the facts, you come away with the realization that it takes careful advance planning to prepare for your active retirement years and

408-356-9200 roy@attorneyoffice.com

http://www.attorneyoffice.com

4


the twilight years that will follow. Clearly, many baby boomers have not planned ahead appropriately and they may be forced to pay a hefty price. The wise course of action is to devise a cogent plan for the future with the assistance of a licensed and experienced attorney who has a background in elder law, retirement planning, and estate planning. Your lawyer will gain an understanding of your retirement and legacy goals, evaluate what is realistically possible for you, and create a cogent plan that leads to the fruition of these goals. If you go forward living in the moment without expert guidance, you may be among the many who will never be able to retire.

References Social Security Administration http://www.ssa.gov/pressoffice/basicfact.htm About the Author

Forbes http://www.forbes.com/sites/janetnovack/2012/10/16/social-security-benefitsto-rise-1-7-workers-face-up-to-2425-payroll-tax-hike/ AP/LifeGoesStrong.com http://www.prnewswire.com/news-releases/ap-lifegoesstrongcom-poll-reveals44-of-all-baby-boomers-are-not-confident-that-they-will-retire-comfortably119247894.html Roy Litherland is certified as a Legal Specialist in Estate Planning, Trust and Probate Law by the California State Bar Board of Legal Specialization. Roy is a member, former Board of Governor, and designated Fellow of the American Academy of Estate Planning Attorneys (AAEPA), a national membership organization committed to assisting attorneys in providing quality estate planning services to their clients.

Financial Security Project of Boston College http://fsp.bc.edu/why-baby-boomers-cant-retire/ MSN Money http://money.msn.com/saving-money-tips/post.aspx?post=a555deea-a470-4bc38ebf-09c841

http://www.attorneyoffice.com

5

Profile for Roy Litherland

Baby Boomer Generation Largely Unprepared for Retirement  

One of the most poignant demographic trends that we are seeing in the United States today is the rapid aging of the population. This is due...

Baby Boomer Generation Largely Unprepared for Retirement  

One of the most poignant demographic trends that we are seeing in the United States today is the rapid aging of the population. This is due...

Advertisement