Wall Street Journal
What's most alarming:
Despite experts predicting the demise of Social Security and pensions topping the endangered species list, Americans are still reluctant to get on the savings bandwagon. Many baby boomers excuse their poor retirement savings habits by expecting to strike it rich with a windfall of an inheritance. At the same time adult children are spending rather than saving. The maintains that elderly parents' financial resources are shrinking because of longer life spans and expensive medical costs, particularly nursing care, which can run upwards of $100,000 per year. At that cost, a 75-year-old woman who spends 10 years in nursing care will deplete her $1 million estate by the time she turns 85. Another cause of depletion is annuitization. Compared with 20% in the 1960s, individuals 65 and older annuitized 50% of their financial resources in the 1990s. Many of today's retirees use their savings to buy fixed annuities, while others take out reverse mortgages. Still, other retirees opt to bequeath a large portion of their estate to charities, or spend the money before they die. According to an AARP study that analyzed the Federal Reserve Board's 2001 Survey of Consumer Finances, the median inheritance baby boomers have received is only $48,000, and only 3% fall into the $20,001 to $50,000 range. Nearly 7% received more than $100,000, and the majority of these recipients were already well-off. A staggering 82% received absolutely no inheritance from previous generations.