There Will Be No Baby Boomer Wealth Transfer

Please stop acting as if it will save any of us

About a year ago I first started becoming aware of a popular type of financial news article that spouted the theory that members of the Millennial generation didn’t need to worry about money, because soon their Baby Boomer parents would start dying and the “biggest wealth transfer” in history would start taking place.

As my Silent Generation (the generation older than the Baby Boomers; there are about 20 million of them in America) mother is still alive, I used to get a good chuckle at those stories as I thought, “Pretty wishful thinking, there, everyone, I’m pretty sure most of the Baby Boomers are still going to be alive twenty (if not thirty) years from now.”

And the retirement and long-term care years of the Baby Boomers? Those are going to be long and expensive years.

This subject has slipped my mind of late, but recently I heard a story on the radio program Marketplace that covered this very truth. In the story, the reporter talked about her spouse’s grandmother Sue, whose spouse died when she was in her late 80s. As a consequence, her grandson (the reporter’s spouse) had to take over doing her finances and helping her. In return, the grandmother pledged that he would inherit everything when she died.

When the grandmother did die, more than a decade later, she only had two thousand dollars left to leave to the grandson.

Not many people would do a job (and often a worrying and stressful job like helping an older person figure out finances and costs and long-term care) for a solid decade if they thought they would net two thousand dollars. The hourly pay rate would be measured in pennies. The journalist further pointed that their family was lucky — the grandmother was a fiscally responsible person who had saved a lot of money for her retirement and nursing needs, so the grandson and his family were not responsible for paying for her care out of pocket. (Which is a very real possibility for some families.)

All of this is not to say that the only reason we ever take care of people is because we are paid to do so. But with families increasingly stretched by the distances between family members— both literally, as when families and friends live in different geographic locations, and figuratively, as in elderly parents who need more help from their children right when those children are bearing the brunt of their income-producing years and caring for their own children — it seems increasingly unrealistic to imagine an idyllic world where parents and grandparents just move in with their children or younger friends and everyone lives happily ever after.

I am one of the lucky people whose parents worked and saved for retirement. My parents actually joked about having enough someday to be “able to pay the nursing home.”

Depending on your viewpoint, my dad was exceedingly “lucky” when he died, in his own home, at age 83. Let’s cover this right now: I’m not a monster and of course I miss my Dad, and I miss him for Mom, because she is lost without him. But I’ve also now seen one of the alternatives to dying in your own home, and it looks, well, let’s just say, “un-fun.”

It is also extremely, extremely expensive. Assisted Living and Memory Care homes charge not only a base fee that covers the apartment or room “rent,” meals, laundry, and basic housekeeping, but also “additional services” or “cares fees” that are assessed and charged every month. These “cares” fees cover things like bathing and washing help, personal hygiene and dressing assistance, the administration of medications, some basic first-aid and health procedures, activities help, and any number of other services that people who cannot perform their own activities of daily living need.

Just to give you an idea of the kind of money we’re talking: My mother requires some help bathing, dressing, getting to meals, and getting all her meds. She is still mobile, able to feed herself, and is not totally incontinent so she can sometimes still use the bathroom herself.

Her housing and care costs between eight and nine thousand dollars a month.

That does not include any of her medications. It does not include regular basic medical procedures like using a home test kit to test her blood because she is on warfarin (my sisters have been trained to do that test, which is a simple finger-prick test). It does not include the cost of her disposable underwear, which we buy and carry in.

I should also, note, here, that we have been very happy with the standard of care at my Mom’s care facility. But there are definitely days and weeks when the quality of that care suffers, because sometimes the facility is understaffed. Such nursing and memory care homes are increasingly having a hard time hiring anyone — CNAs, kitchen workers, housekeepers — even when they pay competitive wages and offer good benefits.

My mother should have enough money to pay for her own care through the end, which is a testament to her work ethic. But will there be enough workers to help care for her — at any price — until the end comes? I hope so.

I don’t even want to think about how much money I’m going to need or what facilities will be available if I make it to her age.

Bottom line? If you’re a Millennial and your Baby Boomer parents are starting to look at retirement and assisted living options, assume that whatever they will be paying for a year in a nice facility — they may be paying that for the next twenty-five to thirty years.

Assume they might pay anywhere between an average of five and ten thousand dollars per month. Let’s just say $7500. Know what that comes out to over the course of, say, conservatively, twenty years?

Nearly two million dollars.

There’s going to be a transfer of wealth from the Boomers, all right. It just won’t be to their children.