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Negative Inheritance

by Richard

baby_boomer_stamp.jpgBet that got your attention…those are two words you hardly ever see linked together.

Much has been written about the stupendous wealth transfer underway as the aging baby boomers prepare to pass their assets to the next generation.

But there is a flip side to this sunny scenario.

What will become of those who become insolvent, whether from poor investment strategy, over spending, or a debilitating but survivable chronic health issue?

This is a topic that should keep the sandwich generation (those with both elderly parents and young dependents) firmly fixated on palliative measures.

There are several factors that heighten the potential peril:

1.  Baby boomers have become habituated to being in debt.

In prior generations, retirement security resulted from burning the mortgage when the old, thirty-year, fixed rate loan was fully paid; while drawing down steady, predictable income from a fully funded corporate defined benefit plan and a solvent Social Security fund.

No wonder we are so nostalgic about the recent past.  The good life seemed to be much more widely attainable then.

Ask any mortgage broker about retired seniors refinancing to maintain their spending power. Maybe you’ve seen the bumper sticker on those huge RVs barreling down the highway: “We are spending our children’s inheritance”.

2.  Increased longevity does not necessarily translate to an increased span of independent living.

Since we’ve dialed back the mortality rates on cancer and heart disease, we’ve opened the door to wide ranging illnesses such as dementia, that will ultimately require virtual full time assistance.

3. In many cases, seniors voluntarily lowered their standard of living while providing continuing financial assistance to adult children who would normally be expected to be self sufficient.

Since life is unfair, the burden of parental care usually falls on the nearest adult child…and/or their spouse. The old nuclear family is often widely dispersed, and geography then becomes destiny.

There is a common sense measure that can greatly alleviate the burden and more equitably distribute its cost.

Even if the parents did not purchase long term care insurance, there is nothing preventing the adult siblings from equally sharing this cost.

The insurer is not concerned with the source of funding….only its timely receipt.

These are never easy family discussions….when to take away the car keys….when to sell the much too large and unmanageable family home.

But failing to squarely address these issues will create much more family friction and unwanted consternation in what ought to be the fulfillment of a life lived long and well.

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