Reporting John Cody
CHICAGO (CBS) — Baby Boomers are facing a real financial squeeze as their savings dwindle, and their parents pass along less than anyone hoped.
As WBBM Newsradio’s John Cody reports, Chicago tax expert Judi Strauss, the owner of Strauss Tax Service, says the parents of boomers are living longer and spending more on their own health care, eating into inheritance dollars boomers had been banking on – for their own kids’ college.
LISTEN: WBBM Newsradio’s John Cody reports
The Wall Street Journal says a 65 year old man has a 60 percent chance of living to age 80, and a 40 percent chance of reaching 85, which all means higher medical costs.
And Strauss says the boomers themselves haven’t been saving enough. Most no longer have defined benefit pensions; instead, they have 401K plans which haven’t panned out well over the last 10 years.
“When I see younger people thinking about retirement, they think that they might have $3- or $400,000, and that is nowhere enough funds from retiring at 60 or 65 until they live to their late 80s,” Strauss said.
Strauss says many boomers also loaded up on credit card debt and home equity loans, leaving them with insufficient savings as retirement approaches.
Strauss points out that just insurance, Medicare and supplemental plus co pays cost over $10,000 a year, which means $200,000 needed every ten years for just one person for medical care alone.
She also says that people trying to live off the interest on their savings are having with secure CDs now paying 1 percent, if they’re lucky and good shoppers.
Strauss’s advice is simple – save as much as you can, and don’t count on much help from the generation before you.