An unprecedented shift is on the horizon, and many are unprepared for the challenges it will bring. The over-85 population is the fastest-growing demographic in the U.S., projected to rise by 79% over the next decade. By 2050, the Alzheimer’s Association estimates that 7 million people aged 85 and older will be living with Alzheimer’s dementia.
This new era of retirement is drastically different from previous generations. Many retirees today are living up to 30 years in retirement—equal to the years they spent working. In fact, one in five retirees is continuing to work, and many are transitioning into second careers. Marc Freedman’s organization, Encore.org, helps individuals in their 50s and 60s embark on meaningful new careers. Today’s retirees are also more educated than ever, with over one-third of baby boomers holding a college degree. They’re also tech-savvy, with 68% on Facebook and 24% on LinkedIn.
Family dynamics have shifted as well. Boomers tend to have fewer children than previous generations, which means fewer potential caregivers as they age. With families often spread across the country, caregiving will become increasingly complex.
Key Concerns of Aging Baby Boomers
Boomers face several challenges as they transition out of their careers. Many are still caring for aging parents while also supporting their adult children, with 82% of parents willing to make significant financial sacrifices to help their kids. At the same time, boomers must manage their own health, well-being, and the decumulation of their retirement assets. This financial decumulation—beginning to use assets for retirement—can be daunting, especially when retirement can last up to 30 years.
The Role of a Financial Planner
To meet the evolving needs of aging boomers, financial planners must shift from traditional asset management to a more holistic approach, becoming lifestyle managers. Planners must familiarize themselves with various service providers, including elder law attorneys, long-term care specialists, and medical professionals. By building a trusted team of experts, planners can quarterback the process, helping clients navigate a wide range of financial, legal, and personal matters as they age.
Long-Term Care Planning: Key Questions
- Will we be able to stay in our home?
Clients must consider if their homes are equipped for aging in place, especially in the event of a disability. Simple questions like whether the bedroom is on the second floor or whether the hallways are wide enough for a wheelchair are often overlooked until it’s too late.
- Who will provide care?
This is a crucial discussion. Family members often assume care duties without fully understanding the implications, while others may need to hire professional caregivers.
- How will we pay for care?
Many assume Medicare will cover long-term care, but it generally doesn’t, especially for custodial care. Other options include Medicaid, which often requires spending down assets, or Veterans Aid & Attendance Benefits for eligible individuals. The reality is that for most, long-term care expenses will be paid from retirement funds, which can be quickly depleted.
Legal Considerations
Planning ahead with legal tools is essential. Clients should designate a durable power of attorney, a healthcare proxy, and a personal representative to manage their estate. Ensuring that beneficiary designations are up to date is also critical to avoid unintended complications.
Legacy and End-of-Life Planning
As boomers age, maintaining control over their lives becomes a priority, as does creating a legacy. Encouraging clients to write a “legacy letter” to share their life stories, values, and wishes with their families can be a meaningful exercise. Additionally, opening discussions on end-of-life planning, such as completing the Five Wishes document, can help ensure clients’ preferences are respected.
Family Meetings: A Key to Smooth Transitions
A well-facilitated family meeting can make all the difference in ensuring smooth transitions. Identifying the family’s “alpha child” to lead and coordinate the meeting, facilitating open communication, and recording key decisions will help align everyone’s expectations. Importantly, these meetings also provide financial planners an opportunity to build relationships with the next generation, ensuring continuity in managing the family’s wealth.
In summary, financial planners must take a proactive, comprehensive approach to address the wide-ranging needs of aging boomers, from long-term care planning to end-of-life discussions, ensuring that both the client and their families are well-prepared for the future.
