No one would have guessed that in retirement, Judi and David Koncak would be nearly out of money and unable to leave their kids much more than a pittance.
They’re both college graduates. David, 84, had a successful business that allowed Judi to stop teaching to stay home and raise their two children. They traveled, owned cars and a home, sent their two kids to college and saved for retirement.
“I thought we’d spend our golden years sitting on a beach in Hawaii with Mai Tais, even if in wheelchairs,” Judi Koncak, 83, said.
Instead, her husband had a stroke, surgeries, and prostate cancer – all of which helped deplete their savings and more.
Now she's back at work part time earning about $15 an hour, selling items on Marketplace “for pennies on the dollar,” and turning to the nonprofit, The Senior Source, in Dallas to find help to pay her bills.
With all their savings gone, she suspects their “house is all I’ll have left” for her kids, and she’s “not even sure until we get repairs done if they would even want it. Whatever they can get out of it, I don’t know.”
If the Koncaks' struggles with health care costs as older adults sound familiar, it’s because they are. Even with insurance, Americans struggle to pay for expenses like premiums, copayments, coinsurance, and uncovered health services.
As a result, the significant wealth transfer from baby boomers to younger generations that researchers have predicted may not be so great after all, as much of older Americans' money goes toward health care.
"One of the biggest factors that drives wealth depletion during retirement is health care costs, including rising out-of-pocket costs for medical treatment and the probability of needing long-term care later in life,” wrote George Schein, technical director for Advanced Consulting Group, in a Nationwide Retirement Institute research report. “The hoped-for transfer of accumulated wealth from boomer parents to their millennial and Gen-X children may ultimately end up in the medical system.”
One-third of Medicare beneficiaries, including more than half under age 65, said it was difficult to afford health care, according to a survey of 7,873 adults from April through July last year by the Commonwealth Fund, a nonprofit focused on health care issues. More than 20%, including over 40% of those under age 65, said health care expenses made it harder for them to afford food and utilities. And they’ve delayed or skipped necessary care.
With all baby boomers (born 1946 to 1964) becoming at least 65 by 2030 and owning 52.8% of the wealth in this country, researchers expect a great generational wealth transfer of up to $84 trillion in assets over the next 20 years.
Generation X (1965-1980), millennials (1981-1996) and Gen Z (1997-2012) are expected to inherit $72 trillion of that amount. About $12 trillion is expected to go to charities.
Most millennials expect to inherit at least $350,000 from their parents or other family members, Schein, of the Advanced Consulting Group, wrote in the Nationwide Retirement Institute research report.
But more than 25% of Americans believe paying for long-term care will diminish their children's inheritance, a 2023 Nationwide Retirement Institute survey of 1,439 boomers, Gen Xers and millennials showed.
Since 2000, the inflation-adjusted price of medical care, including services provided, insurance, drugs, and medical equipment, has increased by over 114%, outpacing the 81% rise in overall prices, nonprofit healthcare researcher KFF said.
On average, the annual per-person cost of home care in 2021 was roughly $42,000 (for 30 hours of weekly care at $27 per hour), more than 20% higher than in 2019, AARP said. The average annual cost of nursing home care is more than $108,000 for a private room, more than twice the typical annual income for people 65 or older.
And with longer life expectancy, an even higher amount of retiree assets will go toward paying for medical care and insurance premiums.