Baby boomers are tragically unprepared for financing their health and long-term care costs as they age. And some important new studies show their circumstances may be much worse in the wake of recent carnage in both the economy and financial markets. So writes Howard Gleckman, a senior research associate at the Urban Institute, in Kaiser Health News.
Gleckman cites one study by the Employee Benefit Research Institute that shows in 2008, the average 401(k) balance of 50-somethings was just $113,000, and for those in their 60s it was barely $125,000.
But even these grim statistics mask the depth of the problem for many. Only one out of every six of those in their 60s has 401(k) assets of more than $100,000. Many have less than $50,000.
Housing, of course, is the other major asset retirees can use to help pay for medical or long-term care costs, Gleckman writes. But many boomers borrowed heavily against their home equity during the housing bubble, and then suffered a big decline in their home values during the bust. The combination, according to the Center for Retirement Research at Boston College means that many of those entering retirement lost as much of a third of the equity they had in their homes at the peak of the market.
Boomers potentially have one other resource to get them through health and long-term care crises in old age–insurance. But, according to Gleckman, the news there is also bad. Retiree health coverage, once a mainstay for the aging, is fast disappearing. According to a new report by the Kaiser Family Foundation and the Health Research and Educational Trust, just 29 percent of employers even offered retiree health benefits to their workers in 2008. That was just a fraction of the nearly two-thirds of companies that provided this coverage 20 years ago.
That leaves Medicare, which faces an untenable financial future. Medicare premiums, especially for high-income retirees, will skyrocket in coming years without significant efforts to contain costs. As Gleckman notes in a recent column, many can expect to pay as much as $5,000 a year in combined premiums for Medicare Part B and Medicare Supplemental (Medigap) within a decade.