The Baby Boomers’ Legacy: Is the Illusion Over for Their Descendants?

While economists have heralded the “largest wealth transfer” in history (between $68 trillion and $84 trillion over the next two decades in the United States), heirs may soon be in for a rude awakening.

According to an analysis by The Washington Post, based on the Health and Retirement Study, experts’ financial projections significantly underestimate the actual cost of aging, support, and care for the elderly.

By focusing on thousands of American seniors who died between 2006 and 2022 and analyzing their financial situation during the last ten years of their lives, the newspaper reveals that the median spending on care amounts to $19,179 per person, or about 17,000 euros. Furthermore, one in six individuals exceeds $50,000 (44,000 euros).

These costs weigh more heavily on low-income families

The financial impact of aging has grown significantly over time: the proportion of retired seniors left destitute after paying for their care rose from 6% (for deaths between 2006 and 2010) to nearly 11% (for deaths from 2017 to 2022). Unsurprisingly, it is the lowest-income households that suffer the most. As reported by Slate, among the group comprising the poorest 20% of people included in the analysis, 41% found themselves without resources after deducting healthcare costs in the years leading up to their deaths. They thus allocated nearly one-third of their assets to these specific costs.

A lower-than-expected inheritance

And these estimates fall well short of reality, as they do not account for the costs of living in nursing homes or assisted-living facilities—the primary expense for families. As economic policy expert Jessica Forden notes in a study published last April: “Most Americans—far more than we realize—will have little left to pass on to future generations after depleting their assets to cover the costs of long-term care.”

Faced with an inheritance that will be quickly swallowed up by the burden of dependency, the descendants of baby boomers will have to rethink their financial expectations.