With Rising Elder Care Costs, The Great Wealth Transfer Wont Be So Great

According to the Federal Reserve, Americans over 60 — including baby boomers and the silent generation — own more than half of the nation's wealth, which amounts to about $96 trillion. For decades, economists, estate planners and families have predicted a large transfer of wealth as older generations pass their money and assets to their children, especially millennials and Gen Xers.

However, according to Annie Logue, financial editor and contributor to Insider, that seems unlikely. Due to the high cost of living and long-term care, older generations are spending their wealth on themselves and leaving little for their children. In an Insider article, Logue wrote, "Instead of an inheritance boom, the reality is that most Americans will not receive a large fortune to ease their grief."

Logue spoke with Marketplace host Kai Rysdal about how long-term care costs are leading to reduced or no inheritance for some families. Below is an edited transcript of their conversation.

Kai Rysdal: Tell me about your grandmother, Sue.

Annie Logue: Grandma Sue, yes. My husband took over her business after my grandfather died, and she was 87 at the time. She had health problems. She told Rick that after she died, he would inherit everything, everything. At that time, it was a lot of money. It would cost about a quarter of a million dollars. But this money went to take care of him. She eventually spent all the money, qualified for Medicaid, and died at age 98. This is a fairly typical story because people live a long time and long-term care can be expensive.

Rysdal: Can we briefly discuss the concept of long-term care and its cost? First, I think they are a lot more expensive than most people think. But it seems that there is no solution for this problem either.

Tagline: Long-term care in the United States is funded by several primary sources, most of which are out-of-pocket. The other is Medicaid. And what happens is that many retirees who have depleted their assets become eligible. Some long-term care is covered by Medicare. And then some of the long-term care costs are covered by the Veterans Administration [now the Department of Veterans Affairs] for people who have served. Many people enlist, serve a few years and then leave, but they are eligible for veterans' benefits. All these programs assume population growth, which makes planners nervous.

Rysdal: This whole idea of ​​intergenerational wealth transfer that we've been hearing about for 20 to 30 years, which may actually be about 30 years ago when these coins came out, but that doesn't seem to be the case. . To. it no longer exists.

Logo: Doesn't exist for the vast majority of people.

Rysdal: It's true, yes. What did your husband do when Grandma Sue left?

LOUGH: Well, first of all, he was grateful that she had enough money so we didn't have to help fund it. And also the fact that he knew how to take good care of her. Most people want the elderly to live well. He was very grateful for that. I think he got about $2,000 and he used that money to buy new windows in our dining room, which, you know, was nice and saved us some money. We are in Chicago. So winter has been declared here. As I said, we are also very grateful that we were able to provide a good quality of life for Grandma Sue. But it costs money.

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