The NY Times recently ran an interesting article on the "quaint" idea that people of my generation think they might receive inheritances from their parents. Figures from the AARP cited show that " 21 percent of people born after 1964 thought they would inherit some money someday".
The 8 reasons listed as why such a quaint idea may not be based in reality are all valid. Health care costs are rising; medicare laws are bound to change over the next 20 years as boomers move into their 70s and 80s; the ease of tapping into one's home equity; the liquidity of life insurance and the availability to cash in those policies; higher divorce rates and the accompanying costs attributed to them , more retirement funds tied up in equities rather than pensions. All valid reasons.
What struck me was these factors can easily (or at least with a some advance planning) be minimized. The article assumes many things about the average American: we like easy access to home equity and use life insurance proceeds to pay down debt. We don't plan ahead and we certainly don't structure our 401k's and IRA's to more conservative investment options later on in life.
Some thoughts:
1) Seek out a financial planner and an estate planning attorney. At the very least, do so once you have children. I like to think of such a visit as an initial visit to the dentist to see what may need to be done for preventative care.
2) Recommend your parents seek out such advice as well. Many boomers have their retirement plans invested in stocks, mutual funds and other investments with a higher rate of return, but more risk of loss. A financial planner can help restructure these retirement accounts to fit a boomer's needs and goals. An attorney can evaluate the need for estate and gift tax planning.
3) Think about long term health insurance. At least investigate them once you hit 65. The last thing you will want to do pay out for private pay nursing care or be forced to consult an elder law attorney on how to spend down assets (assets you've spent 50+ years to accumulate) in order to qualify for Medicare. These policies are expensive and usually require deductibles in the form of out-of-pocket care of the first 100 days of care (or somethign along those lines); but in comparison to the prospect of $200/day nursing home care, the costs of these policies may outweigh the future costs of health care.
