By CATEY HILL
1. "Paws off, Junior, this cash is mine."
Don't expect a big inheritance from your boomer parents -- even if they are rich. Less than half of millionaire boomers say that leaving money for their kids is a priority for them, according to a 2011 U.S. Trust study. But 64% of boomers say they plan to use their money to travel and more than one in three say they want to use it to "have fun."
Boomers didn't get this idea from their elders: Older retirees are seven times more likely than boomers to believe they owe their children an inheritance, according to a survey of high net worth individuals published in the Journal of Financial Planning. By contrast, "boomers are more concerned with leaving behind things like values and keepsakes," says Katie Libbe, the vice president of consumer insights for Allianz Life, the company that conducted the survey.
Even boomers who do plan to leave an inheritance may do so with strings attached. "More often than not clients leave inheritances in trusts," says John Olivieri, a partner at law firm White & Case, who works with a lot of boomer clients. Leaving a lump sum means their kids have access to all of the money all at once. With a trust, a third party manages the money and doles it out at intervals that the parent has specified. "Some parents have concerns about how their kids would invest and spend the money," Olivieri says. Indeed, only one-third of affluent parents strongly agree that their children will be able to handle an inheritance, according to the U.S. Trust survey.
2. "Make room kids, we'll be living with you when we're old."
Boomers are expected to live longer than any other generation. At the same time, it's no secret they haven't saved nearly enough for retirement. Overall, the average retirement savings shortfall for married baby boomers is about $30,000, according to the Employee Benefit Research Institute. Nearly half of early boomers, born between 1948 and 1954, and 44% of late boomers, born between 1955 and 1964, may not be able to afford even basic living expenses in retirement, according to EBRI. The result? Kids could be supporting mom and dad well into their eighties and nineties.
One of the biggest drains on boomer retirement savings will be health-care costs. Medicare pays for just over half of the health-care expenses that the typical elderly person will face, estimates EBRI. A couple who is 65 today will need nearly $300,000 to cover those costs. "People who haven't saved enough for health-care costs will deplete their assets," says Michael Markiewicz, a partner at New York-based Fogel Neale Partners. "A lot of them may have to live with their kids or depend on them for money and care."
If parents do move in, their kids should expect to spend an extra $6,000 and $10,000 annually on food, clothing and other basics, says Andy Cohen, CEO of Caring.com, a website devoted to helping caregivers. Add thousands more for big ticket items like wheelchair ramps or home health-care aids. Expensive as that sounds, it's still less than the $60,000 to $100,000 per year it would cost to move a parent into an Assisted Living Community.
3. " and we blame you for that."
Twenty-seven percent of people in their 50s say that having children got in the way of saving for retirement, compared to 15% who blamed buying a home and 19% who said that household bills were the obstacle, says a 2011 study by ING Direct. That's not surprising, given the typical middle income family spends more than $220,000 to raise a child, up 22% since 1960, according to data from the U.S.D.A. When you add paying for college to the mix sometimes another $100,000 or more retirement savings can really take a hit. "A lot of parents prioritized saving for their kids' college over saving for retirement," says Dan Greenshields, the president of ING Direct Investing.
The reason? "Parents often equate paying for college with helping their child become successful in life," says Deborah Fox, the founder of Fox College Funding, LLC. That's something they feel they have a duty to do, whether or not they can afford it, she adds.
4. "We can't face reality."
What boomers think retirement will be like and what it actually is like are two very different things. A case in point: The forever young generation just can't deal with the idea of growing old. Only 13% of pre-retirees (people over 50 who have not yet retired) think their health will be significantly worse in retirement than it is now, while 39% of retirees report that it actually is worse, according to 2011 research by the Robert Wood Johnson Foundation and the Harvard School of Public Health.
Boomers are a little fuzzy on the financial realities as well. While only 22% of pre-retirees think their financial situation will be worse in retirement, roughly one-third of retirees say that it is worse. Along those same lines, only 14% of "pre-retirees predict that life overall will be worse when they retire, but a quarter of retirees report that it actually is worse. "There's a real disconnect because your life pre-retirement is much different than your life post-retirement," says Hal Hershfield, a professor at NYU who recently conducted a study entitled, Increasing Saving Behavior Through Age-Progressed Renderings of the Future Self.
5. "Until death do us part" doesn't apply to us.
Boomers are untying the knot at a record pace. The divorce rate for people over 50 has doubled in the past 20 years, says the National Center for Family and Marriage Research at Bowling Green State University, compared to a slight decrease in divorce overall. More than 300,000 couples over 50 divorced in 2008, and if the rate continues to grow at current levels that number will jump to more than 400,000 in 2030. What's fueling this trend? Empty nesters who find they are a lot less compatible when the kids aren't around is one reason, says Toronto-based psychologist Tami Kulbatski. Another might be, ironically, boomers' love of marriage: A lot of boomers are in their second, third or even fourth marriage, and these marriages are more likely to end in divorce, says Krista Kay Payne, a researcher at the center.
Divorce will likely take a chunk out of boomers already inadequate retirement funds. Lawyers' fees alone can range from a couple of thousand to tens of thousands of dollars, says Jeff Landers, the president of Bedrock Divorce Advisors. What's more, splitting retirement accounts, investments and other assets and trying to sell a home in the current market can all be money losing propositions, says Susan Colpitts, a CPA and executive vice president of wealth management firm Signature.
6. "We're unhappy ..."
For a generation who once had so much hope for the future, life sure seems disappointing. Boomers are the least happy of all age groups, according to a 2008 study from the University of Chicago. "The generation as a group was so large, and their expectations were so great," writes Yang Yang, the author of the study, "not everyone in the group could get what he or she wanted due to competition for opportunities. " Another report from the the Pew Research Center came to a similar conclusion: On a scale of one to ten, boomers, on average, rate their lives a 6.2, compared to a 6.7 for older adults and 6.5 for younger adults. That may not look like much of a difference, but this pattern has held steady throughout the two decades Pew has conducted this study, explains D'Vera Cohn, a senior writer for Pew. In other words, the boomers have been consistently less happy than younger generations for the past twenty years.
Some of boomers' current gloominess comes straight from the pocketbook. Fully 55% of boomers say that in the next year their income likely won't keep up with their cost of living, compared to just 43% of older adults and 44% of younger ones. They are also more likely than younger people to say it's harder to get ahead now (66% vs. 55%) as compared to 10 years ago, the Pew study found. "The anomaly here is that boomers are in their peak earning years," Cohn writes. "As a group, they enjoy higher median household incomes than do younger or older adults."
7. "... and we eat our feelings."
Nearly one out of every three people ages 50-59 is now considered obese, according to data from the Centers for Disease Control<>, compared to less than one in every five for people age 18 to 29. What's more, baby boomers are significantly fatter than their parents' generation, according to a study by the Beth Israel Deaconess Medical Center, an affiliate of Harvard Medical School. Boomers are struggling to exercise enough to combat their expanding waistlines. But only one in four gets the amount of exercise experts recommend for staying healthy, according to a 2011 poll of nearly 1,500 adults by the Associated Press and LifeGoesStrong.com.
Obesity can lead to serious health problems including diabetes and heart disease. A 65-year-old person who has been obese since age 45 personally incurs roughly $50,000 more in uninsured Medicare costs than a normal weight 65-year old does, according to the National Center for Health Statistics. Medicare and Medicaid end up paying for roughly half of the cost of obesity, which was an estimated $147 billion in 2008, according to a study published in Health Affairs.
8. "And we're addicts."
Blame it on the fact that they grew up in the hippie 60s, but whatever the excuse, boomers are drinking and drugging their way into old age at a rate much higher than their parents' generation. Between 1992 and 2008, the proportion of substance abuse treatment admissions involving Americans 50 and older nearly doubled, according to the Substance Abuse and Mental Health Services Administration. Alcohol is still the most common reason that boomers seek treatment but admissions for heroin abuse more than doubled and cocaine use quadrupled over that period.
"Because of the magnitude of these changes and their potential impact, it is increasingly important to understand and plan for the health care needs including the substance use prevention and treatment needs of this population," the administration writes.
Treatment doesn't come cheap. For individuals, outpatient substance abuse programs cost an average of about $1,400 to $7,400, according to a study by SAMHSA, and can run into the tens of thousands for inpatient treatment. What's more, Medicare will only pay about 55% of an outpatient treatment program, and it will pay for inpatient treatment only if a doctor deems it "medically necessary" and the care is in a hospital. (Medicare doesn't fund those designer "rehab spas," sorry boomers.)
9. "We will bury you in debt."
We're a nation in record debt -- an estimated $14 trillion -- and the sheer number of boomers are expected to significantly add to that in the coming years as they begin to receive Social Security and Medicare benefits. (Government spending on these programs is expected to jump to almost 13% of the U.S. economy by 2030, compared to 7% in 2006, according to the Federal Reserve.) To help reduce the deficit the so-called super-committee, a bi-partisan Congressional group tasked with helping us find saving in the budget to lower deficit, is weighing a variety of proposals.
But don't expect the boomers to go for many of them. Fully 68% of boomers oppose eliminating the tax deduction for interest paid on home mortgages, compared to just 56% of all adults, according to the Pew Research Center. Furthermore, 80% of boomers (vs. 72% of all adults) oppose taxing employer health insurance benefits and 63% of boomers (vs. 58% of all adults) oppose increasing the age one qualifies for full Social Security benefits, the study shows.
Many boomers are more opposed to these plans because "they would feel the impact more than other groups," says Kim Parker, the associate director of the Pew Research Center. But without some sort of deficit reduction, future generations will be left with the dire economic consequences a massive deficit can cause, she says.
10. "We're obsessed with (not) aging."
Sagging skin, crows feet, a dull complexion -- these used to be the inevitable signs of aging. But if the boomers have anything to do with it, that's going to change. The market research firm Global Industry Analysts finds that the U.S. market for anti-aging products, which is largely driven by boomers, will grow more than 42% to $114 billion in 2015.
And it's not just lotions and serums this group is into. People 40 and up (many of whom are boomers) comprised 55% of all surgical cosmetic procedures, like facelifts and tummy tucks, and 74% of all cosmetic "minimally invasive" procedures like cellulite treatments, botox and laser hair removal, in 2010. It also appears that boomer men are one of the fastest-growing segments going under the knife. While overall cosmetic procedures in men increased just 2% in 2010 compared to 2009, facelifts, which are typically performed on the over 50 set, increased 14%, according to data from the American Society of Plastic Surgeons. "No doubt this will become more popular," says Malcolm Roth, the president of the American Society of Plastic Surgeons. "Boomers want to look and feel young."