The Boomer Inheritance Is Going to Nursing Homes | Sequel Sunday

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America, are you sick of hearing that the boomers are hoarding everything yet?
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Because I cannot get away from it.
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It's in every money column, every podcast, every post from some guy in a fleece vest on LinkedIn.
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The boomers are sitting on somewhere between 36 and 124 trillion dollars, depending on who's guessing.
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And any day now, all of it's supposed to come rolling down to the kids.
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And until it does, the story goes, the boomers are hoarding it.
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They're rattling around alone in four-bedroom houses they refuse to sell.
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They're clogging the housing market.
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And as of this week, apparently, they're blowing the rest of it on vacations.
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So I sat down and tried to figure out where all that money is really going.
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And it turns out there is a great wealth transfer happening right now today while everyone's sitting around waiting on the big one.
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It just isn't going to the kids.
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It's going to the care bill, the premiums, the supplements, the aid who comes three mornings a week, the assisted living, the memory care, the nursing home.
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Before a single grandkid sees a dime, the first heir in line is the care, and nobody's counting it.
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That's the inheritance before the inheritance.
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And for most families in this country, that boomer hoard everyone's so mad about isn't a hoard at all.
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It's one house and the house is their care plan.
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I'll say it again so nobody in a newsroom misses it.
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The house is the care plan.
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I'm Chad Law, the last gay conservative with a face for radio and a video decade.
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America, this is common sense.
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If you've got a question, an argument, or think I've got this one dead wrong, text me at 252-CHAD-Law.
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Now let's take this thing apart.
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And I, of all people, should have seen it sooner because I grew up in one of those houses people looked at and assumed we were rich.
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We weren't.
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And notice where the biggest of those trillion-dollar numbers comes from.
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The $124 trillion comes from a research firm called Cerulli, and its clients are the wealth management industry.
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So the people who'd love to manage your inheritance are the ones telling you how big it's going to be.
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That's like asking the steakhouse how hungry you are.
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Now, the people who are mad about this aren't crazy, and I'm not going to pretend they are.
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The boomers do have some assets.
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The houses went up and up, and Washington spent about 50 years making sure they kept going up.
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If you're 32 years old and renting and you can pull up the Zillow number on the house you grew up in, I understand exactly why you're angry.
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That part is real.
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But everyone's been fighting over the size of the pie and nobody's looking at the slice that's already been cut.
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People love to say the boomer house is the boomer retirement, and that's true as far as it goes.
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But there's a slice missing from that pie and it's the biggest one on the plate.
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It's Boomer Healthcare.
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And this week, right on schedule, the news handed us a brand new version of the hoarding story.
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Fortune magazine ran it.
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It's been all over Yahoo Finance, and it's written by Oriana Rosa Royal.
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And this isn't some crank on a blog.
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It's Fortune.
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It's got real numbers in it, and it's the version of the hoarding story your nephew is going to quote at Thanksgiving.
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So I'm going to give it to you at full strength.
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The headline reads, retired boomers are spending their kids' inheritance to go on vacation.
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And it says that it's going to be a shock for the Gen Z kids who expect to inherit $124 trillion.
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And they've got a cute little name for it.
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They call it Ski-ing.
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It's an acronym, spending the kid's inheritance, which is adorable.
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Somebody in a marketing department got a raise for that one.
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Spending the kid's inheritance, as if the kids had a lien on it.
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And try saying that about any other grown adult.
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Your neighbor buys a bass boat and you lean over the fence and say, look at Gary blowing his nephew's money.
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Right under the headline, she tells you this is going to be a huge shock to the millennial and Gen Z kids who are expecting that money.
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And to that, I say yes, it's going to be a shock.
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A lot of those kids are going to get a whole lot less than they think.
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But notice what the headline already did.
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Before you read one fact, it told you who did it.
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Mom and dad took your money and went to the beach.
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So every number that comes after that, you're going to read as evidence against them.
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Okay.
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Let me pick it back up.
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She opens by saying a lot of these errors are going to be disappointed because new data shows boomers are spending on vacations instead of saving for their kids.
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Saving for their kids.
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When did that become a job?
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I'm really asking.
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When did a 70-year-old's retirement account become a savings account for his 40-year-old son?
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Last I checked, a parent's job was to get you to adulthood in one piece, and whatever they had left was theirs to live on until the end.
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So already in the first paragraph, the kids are the owners and the parents are the trustees, and the trustees are misbehaving.
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Hold that up to the light, and it just looks strange.
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Then she gives you her evidence.
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Let's go through this pile of droppings.
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The data comes from a group called ABTA, which she describes as Britain's largest travel trade association.
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And it found 82% of people over 65 took a holiday in the last year, up five points from two years before.
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Ooh.
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Fortune says the head of that group tied the jump to older folks spending money that, in Fortune's words, would have been part of the kid's inheritance.
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Would have been?
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Says who?
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That's like your wallet telling you the steak you ordered would have been part of the busboy's dinner.
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First, a travel trade association.
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That's a travel industry's lobby, and the news is that the travel lobby has discovered people should travel more.
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I'm stunned.
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Next week, the Dairy Council will tell us about cheese.
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Then she tells you boomers are living longer than the generation before them.
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They're richer than their parents were, and instead of staying home, they're booking beach vacations.
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Good.
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And further, look at the first part again, because she does something she doesn't even notice.
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Living longer isn't just more years at the beach.
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It's more years at the end.
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More years when you can't drive.
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More years when you need help with the stairs.
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More years when someone has to come to the house.
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She hands you the exact reason they need the money and keeps on walking.
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What a moron.
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Then the head of the British travel group, that man's name is Mark Tanzer, describes the generation.
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He says they're fitter than they used to be.
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Their mortgage is paid off.
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They're starting their pensions.
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And in his words, they're quite cash rich.
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Quite cash rich.
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Block one, the mortgage is paid off good.
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That means they own a house.
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Block two, owning a house free and clear doesn't put a dollar in your checking account.
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You can't pay a home health aide with your square footage.
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The only way to turn a house into cash is to sell it or borrow against it.
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Block three, if you sell it, you have to live somewhere and you might owe taxes.
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If you borrow against it, you've got a mortgage again at 75.
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So a paid off house and cash rich are two different things.
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Believe me, if a house could write checks, no one would ever sell one.
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And notice who's telling you they're cash rich.
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It's the man who sells them the trips.
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Retirees are his customer list.
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That's like asking the casino how the slot machines are doing.
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Doing great.
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Come on down, folks.
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Then she tells you almost half of people over 65 say rising costs will have no impact on their travel plans.
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Sure.
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At 68, ask her again at 86 when the memory care bill shows up.
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Then she says their disposable income keeps going up, and a lot of boomers feel they've earned the right to spend what they have after a lifetime of working for it.
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Duh!
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They did earn it!
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They worked 40 years, paid off the house, raised the kids.
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If they want to go to Portugal, they've earned Portugal.
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Have the custard tarts.
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I'll hold your phone.
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And then about two-thirds of the way down, she finally gets to America.
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She cites a 2024 Northwestern mutual survey about 4,500 American adults.
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Only 22% of boomers expect to leave an inheritance.
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More than half are planning not to.
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And only 11% say leaving money to their kids is their top financial goal.
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This is the most important number in the whole piece, and she reads it one way, and I read it a completely different way.
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She reads it as, look, they're choosing the beach over you.
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But the survey doesn't say or ask why.
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So let me offer you another explanation, and you tell me which sounds more like your parents'.
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What if more than half of boomers aren't planning to leave an inheritance because they've done the math?
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What if they looked at what assisted living costs and memory care and what Medicare doesn't cover and quietly figured out there isn't going to be anything left to leave?
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That's a generation that read the bill.
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I'm not guessing about this either.
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Three economists, Maria Christina Dinardi.
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Eric French and John Bailey Jones spent years on the exact question of why older Americans don't spend their money down the way everyone expects them to.
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They published it in the Journal of Political Economy, and the answer was medical bills.
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Out-of-pocket medical costs climb fast with age, and for a lot of retirees, the risk of living a long time and needing expensive care is a bigger reason to hang on to the money than leaving anything to the kids.
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So the economists went looking for the hoarding, and what they found was a waiting room, like me.
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Next, she brings up a philosophy called dying with zero from a popular book.
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You spend everything during your life so your bank balance hits zero the day you die, and she quotes a personal finance coach who says it's a shame when people die with a pile of money after a lifetime at jobs they didn't even like.
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And I'm with it, partly.
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Spend your money.
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Live your life.
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Don't die with a pile of cash and a closet full of regrets.
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But if you're going to die with zero, make sure the zero comes after the last bill, not before it.
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Spend down to zero at 78, need memory care at 82, and you don't die with zero.
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You live with zero and somebody else picks up the tab.
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And then the last paragraph, the one that made me angry, she writes, it's going to be a huge shock for the heirs when they open their parents' wills to find nothing left.
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And more than half of Gen Z and nearly six and ten millennials say they're depending on an inheritance to retire comfortably.
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What?
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So let's put the whole piece together the way she built it.
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A generation is counting on the money that isn't theirs.
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Their parents are living longer.
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The care at the end costs a fortune and Medicare doesn't pay for most of it.
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And the villain she lands on is the parents for taking a trip.
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How dare they?
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How dare you take a generation that worked over 40 years, paid off the house, put the kids through school, and is now trying to hold on to enough to keep themselves alive and cared for at the end and make them the bad guys because grandma went to Lisbon to walk the Camino.
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She went to Lisbon for 10 days on a tour bus with a fanny pack and 39 other retired school teachers.
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Somebody called the authorities.
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She's a hoarder.
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What got me most is I went through that article twice, top to bottom, looking for one word, nursing home.
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It's not there.
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No assisted living, no aid, no memory care, no dementia, no Medicare, no long-term care.
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A whole article about where boomer money goes and the single biggest place it goes isn't mentioned once.
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She's right about the shock.
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She just picked the wrong thief and wrote a pile of droppings.
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It isn't their cruises.
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It's their care costs.
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And most people assume, and I don't blame them one bit, that Medicare pays for the nursing home.
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I mean, why wouldn't it?
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It's health insurance for old people, and the nursing home is where old people go when their health goes.
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It doesn't.
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Not for the long haul.
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And I'd bet you a steak dinner, most of the people waiting on that inheritance have no idea.
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So let's make it real.
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Let's take a couple.
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We'll call them Dennis and Barb.
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They bought a split level in 1986 for about, let's say, 90 grand.
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And today it's worth around $600,000.
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On paper, Dennis and Barb are exactly who everybody's mad at.
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Somewhere right now, there's a 26-year-old in a parked car making a video about Dennis and Barb ruining his life.
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Two people, three bedrooms, and a guest bathroom nobody has touched since Reagan.
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As a guy who used to do hair for a living, I can tell you the wallpaper in there is its own crisis.
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But let's say they're in their 70s.
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They're healthy.
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They're on traditional Medicare with a supplement and a drug plan, and they're doing everything right.
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And they're one diagnosis away from that house becoming a room.
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So the next time somebody tells you how many trillions the boomers are sitting on, ask them one question.
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Did you subtract the care?
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Because fortune didn't.
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There's a man in Ohio named Bill.
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He's 68 and the Washington Post sat down with him this summer because his mother's 96 and she has dementia.
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She's been in assisted living for seven years at about $15,000 a month in Ohio.
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Her savings ran out a long time ago, so right now her three kids are paying for her room by borrowing against her life insurance, and if that runs dry, the next thing on the table is selling part of the farm in Kentucky the family has owned since the 1960s.
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The life insurance that was supposed to be what she left her kids is paying for the room she lives in and the farm is the next in line.
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The inheritance is being spent before she's gone and it's being spent on her.
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That's the transfer I'm talking about and nobody is putting it in the wealth transfer number.
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That's a problem.
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Most people figure they already know this story.
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The houses went up.
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Everyone knows the houses went up.
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I've done whole shows on the houses going up.
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And the assumption is that the price of growing old just tagged along with regular inflation like everything else.
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It didn't.
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Not even close.
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The Bureau of Labor Statistics has tracked the price of nursing home care since 1996, and in those 30 years, it's gone up a little over 200%.
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I know what 200% sounds like.
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It sounds like a slide in a meeting you're trying to sneak out of.
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So, again, let's go back to the kitchen table.
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$20 worth of everything in 1996, let's say your groceries and your gas and your haircut, today is about $42.
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The price has roughly doubled and we all complain about it.
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But $20 of nursing home care in 1996 costs about $62 today.
219
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Everything doubled.
220
00:14:12.239 --> 00:14:13.840
Care costs tripled.
221
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And the part that should make you mad is that the federal government wrote that price down every single month for 30 years.
222
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They'll argue for a month about the price of eggs.
223
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This one, they just wrote down.
224
00:14:24.697 --> 00:14:32.320
So back when Dennis and Barb had been in that split level 10 years ago, a year in a shared nursing home ran around $37,000.
225
00:14:32.880 --> 00:14:33.980
Today, it's about $115,000.
226
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They paid off the mortgage, replaced the roof, raised the kids.
227
00:14:38.002 --> 00:14:42.844
And the whole time, a few miles down the road, the room at the end of the line was quietly tripling in price.
228
00:14:44.487 --> 00:14:46.788
So what does it cost right now if Barb needs help?
229
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A survey outfit called Care Scout puts a semi-private nursing home at about $115,000 a year and your own room at about $130,000.
230
00:14:55.770 --> 00:15:00.091
So a roommate is worth $15,000 a year, which depending on the roommate might be a bargain.
231
00:15:00.152 --> 00:15:08.514
And an aide at home full-time is about $80,000, roughly what a typical household earns in a year, so your wife can stay at her own kitchen table.
232
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The one piece of good news is that last year, nursing home prices only went up about toop, and CareScout's own CEO put it better than I could.
233
00:15:16.466 --> 00:15:19.267
He said, moderation does not mean affordability.
234
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That's like your landlord calling to say, good news, rent only went up 2% this year on $115,000.
235
00:15:22.948 --> 00:15:23.268
Thank you.
236
00:15:23.288 --> 00:15:24.109
I'll go light a candle.
237
00:15:28.443 --> 00:15:29.944
So let's do the math nobody does.
238
00:15:30.624 --> 00:15:32.766
Dennis and Barb's house is worth $600,000.
239
00:15:33.286 --> 00:15:36.228
A semi-private room is $115,000 a year.
240
00:15:36.769 --> 00:15:39.290
That's five years, and the whole house is gone.
241
00:15:39.791 --> 00:15:44.894
If one of them needs a bed, and at Bill's mother's price, the split level doesn't make it to year four.
242
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That's a down payment on a room.
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00:15:47.696 --> 00:15:50.537
quite cash rich for about five years.
244
00:15:51.257 --> 00:15:52.338
Barb isn't hoarding the house.
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00:15:52.658 --> 00:15:55.799
Barb has it on layaway for a room she hopes she never needs.
246
00:15:56.459 --> 00:16:00.420
And you don't have to take my word for it because the Washington Post ran out and measured it.
247
00:16:01.041 --> 00:16:07.083
They ran it in July, written by Frederica Coco and Shannon Jabadi, not Jabadi.
248
00:16:07.940 --> 00:16:13.807
As the cost of aging soars, families' wealth is evaporating, and it's been bouncing around ever since.
249
00:16:13.928 --> 00:16:14.949
Fortune built on it.
250
00:16:15.189 --> 00:16:16.631
The Federalists built on it.
251
00:16:16.691 --> 00:16:22.158
And if you've heard anyone say this year elder care is eating the inheritance, there's a good chance it started here.
252
00:16:22.966 --> 00:16:28.789
They open by telling you economists called the boomers' coming inheritance the greatest wealth transfer in history.
253
00:16:29.270 --> 00:16:37.775
Boomers control more than half of all household wealth in America, and somewhere between $68 and $84 trillion is supposed to change hands over the next 20 years.
254
00:16:38.535 --> 00:16:41.417
Sure, that's the same pile everyone's staring at.
255
00:16:41.897 --> 00:16:44.499
The post starts exactly where the hoarder crowd starts.
256
00:16:45.328 --> 00:16:49.250
But in the very next line, they turn, and it's the most important sentence in the piece.
257
00:16:49.830 --> 00:16:53.912
But those estimates might not sufficiently account for the cost of growing old.
258
00:16:54.672 --> 00:16:55.852
See what they're doing there, folks?
259
00:16:56.273 --> 00:16:58.033
Might not sufficiently account.
260
00:16:58.433 --> 00:17:02.255
That's the most polite way a newspaper has ever told you the number is wrong.
261
00:17:02.835 --> 00:17:06.777
That sentence went through four editors and a lawyer, and the lawyer won.
262
00:17:08.265 --> 00:17:15.370
Next, they say elder care is eating much of what seniors hope to pass down, and for a growing number, it wipes out their savings entirely.
263
00:17:16.071 --> 00:17:17.892
And then a line I don't think enough people caught.
264
00:17:18.252 --> 00:17:22.175
Some adult children are now spending their own savings on their parents' care.
265
00:17:22.595 --> 00:17:26.118
So in some families, the inheritance didn't just shrink, it reversed direction.
266
00:17:27.027 --> 00:17:33.372
Then they bring back Bill, and he tells them it just eradicates any generational wealth unless you're very, very well off.
267
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Eradicates.
268
00:17:35.233 --> 00:17:37.094
Nobody uses that word about a vacation.
269
00:17:37.755 --> 00:17:44.880
And his wife, Sharon, a boomer herself, says the two of them have talked about what it would take if one of them got the same diagnosis.
270
00:17:44.940 --> 00:17:48.043
And her estimate is a million, maybe two million dollars.
271
00:17:48.703 --> 00:17:51.345
That's a boomer at her own kitchen table doing her own math.
272
00:17:51.745 --> 00:17:55.427
They expect to spend nearly everything and leave very little to their kids.
273
00:17:55.827 --> 00:17:56.988
She isn't hoarding anything.
274
00:17:57.248 --> 00:17:58.969
She watched it happen to her mother-in-law.
275
00:18:00.089 --> 00:18:07.714
They compared people who died in the late 2000s with people who died a few years ago and counted how many people's care bills wiped them out completely.
276
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Zero.
277
00:18:09.155 --> 00:18:09.835
Left with nothing.
278
00:18:10.735 --> 00:18:11.796
That went from about 6% to 11%.
279
00:18:13.733 --> 00:18:18.195
So in about a dozen years, the odds of your care eating every last dime you had doubled.
280
00:18:18.875 --> 00:18:20.536
And it lands right where you'd expect.
281
00:18:20.936 --> 00:18:28.520
Among the poorest fifth of older Americans, about four in ten were left with nothing, and they spent close to a third of everything they owned on care.
282
00:18:29.383 --> 00:18:31.906
about 20 times the share the richest fifth spent.
283
00:18:32.427 --> 00:18:37.192
So the family at the top pays for the nursing home out of the interest and still passes down a fortune.
284
00:18:37.533 --> 00:18:40.176
The family in the middle pays for it out of the house.
285
00:18:40.816 --> 00:18:43.219
So the great wealth transfer is real, folks.
286
00:18:43.600 --> 00:18:45.121
It's real for the folks at the top.
287
00:18:45.342 --> 00:18:47.644
For everyone else, it's a rumor with a press release.
288
00:18:48.225 --> 00:18:50.849
And then the post admits something and it's buried.
289
00:18:51.309 --> 00:18:58.559
These numbers probably understate the cost because they leave out room and board and assisted living, which is often most of the bill.
290
00:18:58.880 --> 00:19:01.564
So everything they just showed you is the floor, not the ceiling.
291
00:19:02.245 --> 00:19:05.269
Next, they say out loud what a lot of people are thinking, and I'm reading it.
292
00:19:06.255 --> 00:19:09.958
When they need more money, they may make money from selling their homes.
293
00:19:10.539 --> 00:19:12.480
And to that, I say, yes, that's my whole point.
294
00:19:12.701 --> 00:19:14.222
The house is the care plan.
295
00:19:14.882 --> 00:19:17.144
And then in the same paragraph, they do the math for you.
296
00:19:17.705 --> 00:19:21.608
Seven years of nursing home care for dementia gets you close to a million bucks.
297
00:19:22.289 --> 00:19:25.111
For most families in America, that's the house and then some.
298
00:19:25.612 --> 00:19:34.019
So the paper tells you they can sell the house to pay for care, then tells you the care costs more than the house and still frames it as a family finance problem.
299
00:19:34.787 --> 00:19:43.511
Then they bring in an economic policy researcher named Jessica Forden, who wrote a study this spring for the Roosevelt Institute, which the post itself describes as liberal.
300
00:19:43.871 --> 00:19:45.832
So not exactly a Chad Law fan club.
301
00:19:46.552 --> 00:19:52.094
But she found typical middle class and lower income families who spent down their retirement savings never recovered.
302
00:19:52.474 --> 00:19:54.335
And she put it as about as plainly as you can.
303
00:19:54.815 --> 00:19:58.457
It's going to be the folks at the very top end who are passing on inheritance.
304
00:19:59.117 --> 00:20:01.859
How is that different from years and generations before?
305
00:20:02.199 --> 00:20:02.459
Never.
306
00:20:02.839 --> 00:20:04.400
Richest people pass it down.
307
00:20:04.940 --> 00:20:06.381
Everything else gets eaten up.
308
00:20:06.901 --> 00:20:10.563
But everyone thinks that these houses and this equity is wealth.
309
00:20:10.763 --> 00:20:11.784
It's not wealth.
310
00:20:12.164 --> 00:20:15.866
It's already been earmarked for the cost of their care.
311
00:20:16.387 --> 00:20:21.649
Everybody else spends what they have on care, sometimes right down to the point where they qualify for Medicaid.
312
00:20:22.410 --> 00:20:27.272
When a progressive think tank and the last gay conservative agree on something, you should probably write it down.
313
00:20:27.633 --> 00:20:28.073
Just saying.
314
00:20:29.452 --> 00:20:32.376
And then they end on a man named Conrad Miles.
315
00:20:32.997 --> 00:20:35.980
He had a railroad pension and about $200,000 saved.
316
00:20:36.161 --> 00:20:40.626
Exactly the responsible, boring number every one of us was told to save.
317
00:20:41.107 --> 00:20:44.791
He went into assisted living and his daughter said the savings were gone in a heartbeat.
318
00:20:45.152 --> 00:20:45.572
It's sick.
319
00:20:46.133 --> 00:20:53.659
When he died at 93, he had about 30,000 left, not even three months of care, and he apologized to his daughter for having nothing to leave them.
320
00:20:54.299 --> 00:20:55.180
He apologized.
321
00:20:55.640 --> 00:21:00.464
A railroad man who saved his whole life apologized to his kids because the care took it.
322
00:21:00.964 --> 00:21:01.965
Nobody stole that money.
323
00:21:02.005 --> 00:21:02.745
Nobody hoarded it.
324
00:21:03.046 --> 00:21:09.130
It went to a building and to the people inside it who helped him get dressed in the morning, and that's a perfectly honorable place for money to go.
325
00:21:09.831 --> 00:21:12.733
It's just not where the great wealth transfer crowd thinks it's going.
326
00:21:12.873 --> 00:21:13.233
Yeah.
327
00:21:13.393 --> 00:21:16.435
One more line in that piece should have been its own story.
328
00:21:17.376 --> 00:21:23.020
Only about 3% of adults have long term care insurance and only about 15% of people over 65.
329
00:21:23.820 --> 00:21:26.923
So the smart guy in the back says, well, they should have bad insurance.
330
00:21:27.825 --> 00:21:30.086
Okay, let me tell you what happened to the people who did.
331
00:21:30.686 --> 00:21:40.870
Jen Worth, one of the biggest long-term care insurers in the country, has spent years going state to state asking to raise premiums on people who already bought their policies and paid in for 20 years.
332
00:21:41.411 --> 00:21:48.813
At one point, their increases averaged around 58%, and in Maine, they've asked for hikes on some policies of well over 150%.
333
00:21:50.134 --> 00:21:57.960
So the people who did the responsible thing got a letter in their 70s saying the premium you planned your retirement around just went up by half or more.
334
00:21:58.440 --> 00:22:01.563
Pay it, cut your coverage or walk away from 20 years of payments.
335
00:22:01.883 --> 00:22:02.904
That's not insurance.
336
00:22:03.204 --> 00:22:05.406
That's a subscription with a hostage.
337
00:22:05.526 --> 00:22:08.108
The Washington Post found the great wealth transfer.
338
00:22:08.128 --> 00:22:12.211
Then it wrote it up like a problem that lives at your kitchen table and not in Washington.
339
00:22:13.052 --> 00:22:14.233
So I'll swing for them.
340
00:22:15.035 --> 00:22:21.600
The next time somebody at Thanksgiving starts in about mom and dad sitting on a gold mine, put the fork down and ask the only question that matters.
341
00:22:22.360 --> 00:22:24.222
Did you subtract their care?
342
00:22:24.762 --> 00:22:27.804
And another thing happened this year that didn't get the attention it deserved.
343
00:22:28.265 --> 00:22:33.869
The very first baby boomers born in 1946, the year after the war ended, turned 80.
344
00:22:34.469 --> 00:22:34.789
80!
345
00:22:35.290 --> 00:22:39.593
The generation we still talk about like it's a bunch of guys in their 50s with a boat and a bad attitude.
346
00:22:40.053 --> 00:22:46.256
More than 4 million Americans are turning 65 every year right now, and the retirement industry even has a name for it.
347
00:22:46.496 --> 00:22:49.597
Peak 65, which sounds like a mountain you climb.
348
00:22:49.977 --> 00:22:50.778
I suppose it is.
349
00:22:51.378 --> 00:22:53.159
At the top, there's just a big fat copay.
350
00:22:53.879 --> 00:22:56.440
But the expensive years aren't 65.
351
00:22:56.800 --> 00:23:00.282
At 65, you're doing water aerobics and complaining about your knees.
352
00:23:00.902 --> 00:23:07.228
The expensive years are the late 80s and the 90s, and the first boomers hit 85 in about five years.
353
00:23:07.448 --> 00:23:08.449
The wave isn't coming.
354
00:23:08.969 --> 00:23:10.511
It's at the door, wiping its feet.
355
00:23:11.151 --> 00:23:17.457
And the people writing the think pieces about boomer hoarding are standing on the beach with their backs to the water, filming themselves.
356
00:23:18.057 --> 00:23:26.225
And last week, Fast Company ran a piece exactly on that wave on a big new Australian study in the journal JAMA Neurology.
357
00:23:26.845 --> 00:23:32.589
It's by Angela Louise Jackson, and the headline says dementia cases are expected to more than double by 2050.
358
00:23:32.729 --> 00:23:37.892
I think it's a good piece, and I think it stops one step short of the most important thing it says.
359
00:23:38.453 --> 00:23:46.618
She opens by telling you research says dementia diagnoses will more than double by 2050, which means more of the people close to you are likely to be affected.
360
00:23:47.139 --> 00:23:50.221
And to that, I say yes and do something with it before we go further.
361
00:23:50.841 --> 00:23:57.306
Think about the people close to you, the parents, your in-laws, the neighbor who brings over zucchini every August, whether you want it or not.
362
00:23:57.826 --> 00:24:00.108
That's who she's talking about, not a chart them.
363
00:24:00.448 --> 00:24:01.128
Then the numbers.
364
00:24:01.929 --> 00:24:09.414
New dementia diagnoses around the world were about 11.4 million in 2023, and they're projected to hit about 24.7 million by year 2050.
365
00:24:12.096 --> 00:24:13.197
So put it on your street.
366
00:24:13.617 --> 00:24:20.940
If one neighbor got the diagnosis this year in 25 years, it's two driveways where somebody has to figure out who's taking mom to her appointments.
367
00:24:22.061 --> 00:24:25.122
So many more people are dealing with memory problems than they used to.
368
00:24:25.482 --> 00:24:35.167
Everyone I know has somebody, a grandmother, an aunt, a dad who tells the same story at Thanksgiving, then tells it again 20 minutes later, and then one year doesn't know who's sitting at the table anymore.
369
00:24:35.854 --> 00:24:38.256
And I was half right, which for me is a pretty good day.
370
00:24:38.877 --> 00:24:40.018
More people do have it.
371
00:24:40.138 --> 00:24:43.702
But for any given age, your odds of getting dementia here aren't going up.
372
00:24:43.802 --> 00:24:46.105
And some studies say they've actually come down a little.
373
00:24:46.725 --> 00:24:50.970
What changed is that a whole lot more of us are living long enough to get there.
374
00:24:51.700 --> 00:25:00.486
The Alzheimer's Association put it at about 7.4 million Americans 65 and older living with Alzheimer's right now, and they project close to 13 million Americans by 2050.
375
00:25:00.626 --> 00:25:03.848
In past 85, it's roughly one in three.
376
00:25:04.649 --> 00:25:06.350
So it's not that something broke.
377
00:25:06.690 --> 00:25:07.791
It's that something worked.
378
00:25:08.371 --> 00:25:14.913
We got really good at keeping people alive, and the bill for that success is a few years at the end that somebody has to pay for.
379
00:25:15.373 --> 00:25:16.913
We nailed the keeping alive part.
380
00:25:16.973 --> 00:25:19.114
Nobody ever figured out the paying for it part.
381
00:25:19.714 --> 00:25:21.234
And the research backs that up.
382
00:25:21.634 --> 00:25:34.057
The Bramingham Heart Study, which has followed the same Massachusetts town since 1948, found that the rate of new dementia cases dropped about 20% per decade since the late 70s.
383
00:25:34.698 --> 00:25:36.098
So your odds got better.
384
00:25:36.678 --> 00:25:39.580
There are just a whole lot more of us playing the odds.
385
00:25:40.401 --> 00:25:43.103
And Washington has known exactly how many of us were coming.
386
00:25:43.383 --> 00:25:45.985
It has had their birth certificate since 1946.
387
00:25:46.385 --> 00:25:50.728
This is the most predictable bill in American history, and Medicare doesn't cover the long years at all.
388
00:25:51.792 --> 00:25:52.693
So who's paying it?
389
00:25:52.713 --> 00:26:01.979
A USC study this summer, funded through the National Institute of Aging, put the cost of dementia in America this year at $818 billion.
390
00:26:02.360 --> 00:26:06.743
Medicare and Medicaid together cover roughly $154 billion of it.
391
00:26:07.223 --> 00:26:11.066
Families cover $237 billion in unpaid care.
392
00:26:11.486 --> 00:26:15.609
That's the daughter who moved back home and the son who drives over every night after work.
393
00:26:16.149 --> 00:26:19.332
And the families pay another $46 billion straight out of pocket.
394
00:26:20.145 --> 00:26:23.447
So families are carrying more of the dementia bill than Washington is.
395
00:26:23.907 --> 00:26:28.810
The Alzheimer's Association says nearly 13 million Americans are doing that care for free right now.
396
00:26:29.110 --> 00:26:30.431
That's the inheritance, too.
397
00:26:30.691 --> 00:26:32.932
It just gets paid in hours instead of dollars.
398
00:26:33.512 --> 00:26:35.453
Everything in fast company is true.
399
00:26:35.714 --> 00:26:41.357
It just stops at the edge of the medical story and never walks into the money story, which is the one that lands on your kitchen table.
400
00:26:42.017 --> 00:26:47.986
Aging populations has a name here, the boomers, and an address, Denny and Barb split level.
401
00:26:48.487 --> 00:26:52.472
Aging populations is your mother, and your mother comes with an invoice.
402
00:26:53.173 --> 00:26:54.014
So let's price it.
403
00:26:55.042 --> 00:27:03.245
Post, citing Boston College's Retirement Research Center, reports nearly one in five Americans will need high-intensity care for more than three years.
404
00:27:03.625 --> 00:27:08.066
Help getting out of bed, help eating, help in the bathroom every day for three years or longer.
405
00:27:08.607 --> 00:27:10.707
Think about your parents and your in-laws.
406
00:27:11.227 --> 00:27:12.528
Four people in most families.
407
00:27:13.008 --> 00:27:16.949
Odds are pretty good one of those four lands in that one in five.
408
00:27:17.730 --> 00:27:20.811
And three years at $115,000 is $345,000 for one person for one stretch at the end.
409
00:27:25.502 --> 00:27:26.203
Isn't that something?
410
00:27:27.043 --> 00:27:33.268
That's more than a lot of people will ever see from their entire inheritance, and it goes out the door before the will is ever read.
411
00:27:33.948 --> 00:27:35.409
And Dennis and Barb are two people.
412
00:27:35.810 --> 00:27:38.031
Two chances land in the one in five.
413
00:27:38.392 --> 00:27:43.055
Two chances land in the one in three past 85, and they don't get to pick which one or when.
414
00:27:43.515 --> 00:27:45.937
And the cruel math of being a couple goes like this.
415
00:27:46.317 --> 00:27:50.501
If Barb needs the room, Dennis is still alive and paying for himself at home.
416
00:27:51.101 --> 00:27:53.584
So the house isn't covering one person's care.
417
00:27:53.604 --> 00:27:57.308
It's covering one person's care and the other person's life at the same time.
418
00:27:58.189 --> 00:28:00.050
My own parents are in their 70s, too.
419
00:28:00.311 --> 00:28:02.633
And I thank God they're healthy, very healthy.
420
00:28:03.114 --> 00:28:04.295
I'm the kid of two boomers.
421
00:28:04.595 --> 00:28:08.539
And if your parents are in that range, sit down and do this math for the next 20 years.
422
00:28:08.820 --> 00:28:13.445
Not because it's morbid, because the only people who get blindsided are the ones who don't look.
423
00:28:13.885 --> 00:28:17.366
It's a birthday party that started this year and it's going to run for 20.
424
00:28:17.646 --> 00:28:24.029
And every one of those birthdays is somebody walking a little closer to the expensive years, carrying a house they're going to need.
425
00:28:24.589 --> 00:28:32.232
So when somebody tells you how many trillions are about to roll downhill to the kids, ask them how many of those trillions have to get through the dementia years first.
426
00:28:33.052 --> 00:28:34.594
Did you subtract the care?
427
00:28:35.115 --> 00:28:37.579
And Medicare open enrollment started last week.
428
00:28:37.659 --> 00:28:41.685
If you've got parents over 65, you already know because your phone's been ringing.
429
00:28:42.205 --> 00:28:43.667
Honey, what's a formulary?
430
00:28:43.968 --> 00:28:44.789
Nobody knows, Mom.
431
00:28:44.809 --> 00:28:45.670
Nobody has ever known.
432
00:28:46.231 --> 00:28:48.915
And right in the middle of it, CNN ran a piece by Tommy Luby.
433
00:28:49.636 --> 00:28:56.380
Headlined Medicare Advantage enrollees face fewer plans, higher costs, and benefit cuts for 2027.
434
00:28:56.921 --> 00:28:59.522
I think it's describing something bigger than she says it is.
435
00:29:00.163 --> 00:29:04.525
She opens with three short lines, and I'll read them exactly the way she wrote them.
436
00:29:05.086 --> 00:29:09.689
Fewer health insurance plans, higher out-of-pocket costs, skimpier supplemental benefits.
437
00:29:10.393 --> 00:29:13.855
That's the most honest lead I've ever seen in a long time.
438
00:29:14.335 --> 00:29:16.897
Somebody give that woman a raise before CNN finds out.
439
00:29:17.597 --> 00:29:24.101
Then she says open enrollment runs through December 7th, and the experts say review your options so you don't get a surprise bill.
440
00:29:24.741 --> 00:29:25.742
And to that, I say yes.
441
00:29:25.882 --> 00:29:27.023
Call your mother this week.
442
00:29:27.063 --> 00:29:28.403
But notice how it's framed.
443
00:29:28.583 --> 00:29:29.724
It's a shopping problem.
444
00:29:30.044 --> 00:29:30.865
Compare the plans.
445
00:29:30.925 --> 00:29:31.785
Pick the right ones.
446
00:29:31.845 --> 00:29:32.986
Avoid the surprise.
447
00:29:33.186 --> 00:29:34.547
Like a cell phone contract.
448
00:29:35.155 --> 00:29:42.242
Next, she tells you Medicare Advantage now covers just over half of the roughly 71 million people on Medicare, and it's the third straight year of turmoil.
449
00:29:43.443 --> 00:29:48.027
The insurers say the Medicare medical costs are rising faster than what the government pays them.
450
00:29:48.067 --> 00:29:49.929
The critics say the insurers overbill.
451
00:29:50.910 --> 00:29:52.071
Put that on the kitchen table.
452
00:29:52.091 --> 00:29:54.333
The insurance company says the government isn't paying enough.
453
00:29:54.694 --> 00:30:00.039
Critics say the insurance company is padding the bill, and the person who gets the letter in the mail is your 78-year-old grandma.
454
00:30:01.066 --> 00:30:03.548
Then she tells you why Medicare Advantage got so popular.
455
00:30:03.888 --> 00:30:08.151
It caps your out-of-pocket spending and throws in extras like dental, vision, and hearing.
456
00:30:08.832 --> 00:30:13.976
The trade-off is a narrow list of doctors and some treatments the insurer has to sign off first.
457
00:30:14.436 --> 00:30:17.418
That was the deal a lot of seniors made, and it was a reasonable one.
458
00:30:18.119 --> 00:30:19.340
Now watch what happens to it.
459
00:30:20.208 --> 00:30:32.659
She brings in a man named Jared Strzok, who runs a newsletter tracking this market, and he found that about 3.2 million people, nearly one in nine on Medicare Advantage, are being forced to shop for a new plan because theirs is going away.
460
00:30:33.280 --> 00:30:35.822
It used to be one or two in a hundred.
461
00:30:36.823 --> 00:30:38.525
Picture that at your mother's bridge table.
462
00:30:39.165 --> 00:30:42.809
Used to be once every few years, somebody mentioned her plan got canceled.
463
00:30:43.129 --> 00:30:46.452
Next year, at the table of eight or nine women, one of them gets the letter.
464
00:30:47.293 --> 00:30:49.895
And rural folks are the most likely to lose their insurers.
465
00:30:50.576 --> 00:30:53.699
In a lot of rural towns, folks already drive an hour to see a specialist.
466
00:30:53.739 --> 00:30:55.761
Imagine losing your plan on top of that.
467
00:30:56.453 --> 00:30:59.656
Then comes the darkest joke in the piece, and she doesn't play it as a joke.
468
00:31:00.196 --> 00:31:06.202
The one kind of plan insurers are adding is plans for people with chronic conditions like heart disease and diabetes.
469
00:31:06.242 --> 00:31:10.286
And the reason is the government pays them more for sicker members.
470
00:31:10.926 --> 00:31:14.009
That category went from about 370 plans in 2025 to more than 700 the following year.
471
00:31:17.749 --> 00:31:18.991
Congratulations, America.
472
00:31:19.292 --> 00:31:21.015
We finally found a growth industry.
473
00:31:21.055 --> 00:31:21.957
It's being sick.
474
00:31:22.558 --> 00:31:26.746
Somewhere, an insurance executive looked at a spreadsheet and said, you know what's really profitable?
475
00:31:27.067 --> 00:31:28.229
Grandpa's heart disease.
476
00:31:29.272 --> 00:31:33.954
Then the extras, the dental, the hearing, the rides to the appointments are all expected to shrink.
477
00:31:34.654 --> 00:31:35.334
Then the costs.
478
00:31:35.735 --> 00:31:39.676
Premiums on regular plans jump 23% to about $15 a month.
479
00:31:40.076 --> 00:31:45.078
The out-of-pocket cap, the whole selling point goes up 9% to about $6,600.
480
00:31:45.539 --> 00:31:48.580
So add it up the way her own reporting adds it up.
481
00:31:49.160 --> 00:31:57.705
You pay the same or more, you get fewer choices, the good plans go first, caps go up, extras go away, the deductible you didn't have, you have now.
482
00:31:58.205 --> 00:32:01.166
There's a word for that, and you may know it from the cereal aisle.
483
00:32:01.547 --> 00:32:04.488
You pay the same or more, and the box has less in it.
484
00:32:04.988 --> 00:32:08.090
It's shrinkflation of senior health coverage.
485
00:32:08.810 --> 00:32:10.751
Some premiums even dip next year.
486
00:32:10.811 --> 00:32:12.953
The caps and the deductibles sure didn't.
487
00:32:13.813 --> 00:32:14.294
She nailed it.
488
00:32:14.554 --> 00:32:17.076
Every number holds up, and she stopped at the shopping list.
489
00:32:17.456 --> 00:32:18.897
I'd take it one step further.
490
00:32:19.318 --> 00:32:22.600
Everything she walked you through is the part of the Medicare that's shrinking.
491
00:32:23.061 --> 00:32:25.362
The long-term care was never even in the box.
492
00:32:25.823 --> 00:32:27.084
And I'm not anti-Medicare.
493
00:32:27.124 --> 00:32:27.965
I'm pro-results.
494
00:32:28.025 --> 00:32:35.431
And the result is that your mother's coverage gets smaller every October, and the thing she's most likely to need at the end was never covered at all.
495
00:32:36.184 --> 00:32:39.807
Block one, Medicare will cover skilled nursing after a hospital stay.
496
00:32:39.847 --> 00:32:40.087
True.
497
00:32:40.668 --> 00:32:44.991
Block two, to get it, you have to be admitted as an inpatient for at least three days.
498
00:32:45.031 --> 00:32:54.039
And the trap is if the hospital keeps you under what they call observation status, you can be lying in a hospital bed in a hospital gown, eating hospital jello on paper.
499
00:32:54.219 --> 00:32:55.220
You were never admitted.
500
00:32:55.880 --> 00:32:58.483
Three nights in a hospital and Medicare says you were a guest.
501
00:32:59.205 --> 00:33:01.329
like you checked into a Marriott with an IV.
502
00:33:01.770 --> 00:33:02.852
Those days don't count.
503
00:33:03.133 --> 00:33:07.421
That rule goes back to 1965, and families still get caught by it every week.
504
00:33:08.128 --> 00:33:11.931
Block three, even if you qualify, Medicare covers up to 100 days.
505
00:33:12.672 --> 00:33:14.814
After day 20, you start paying a daily share.
506
00:33:15.254 --> 00:33:17.496
And after day 100, it's done.
507
00:33:18.177 --> 00:33:23.542
Block four, the long years, the memory care, the aide who comes every morning to help your dad shave and get his socks on.
508
00:33:23.782 --> 00:33:25.223
Medicare doesn't pay for that at all.
509
00:33:25.343 --> 00:33:26.024
It never has.
510
00:33:26.725 --> 00:33:32.630
So the coverage your parents have is shrinking every fall, and the coverage everyone assumes they have doesn't even exist.
511
00:33:33.211 --> 00:33:38.515
Now there's a cheerier take going around this month, and if you read it to the bottom, it isn't cheery at all.
512
00:33:39.255 --> 00:33:47.160
Forbes ran a piece last week by a neurosurgeon named Richard Menger on what next year's Social Security raise means for Medicare patients.
513
00:33:47.621 --> 00:33:48.962
He opens with the good news.
514
00:33:49.402 --> 00:33:54.705
Social Security goes up 3.6% next year, about $75 a month for the average recipient.
515
00:33:55.306 --> 00:33:55.546
Good.
516
00:33:55.906 --> 00:33:56.487
Take the raise.
517
00:33:57.267 --> 00:34:00.850
Then he gets to a section called Medicare takes its share first.
518
00:34:01.575 --> 00:34:03.286
which could be the name of this episode.
519
00:34:04.022 --> 00:34:13.030
The Part B premium comes straight out of the Social Security check, and it's projected to go up only about $6.60, so most people keep most of the raise.
520
00:34:13.590 --> 00:34:15.272
And he's right for this year.
521
00:34:15.932 --> 00:34:17.494
But then he keeps going, to his credit.
522
00:34:17.994 --> 00:34:22.918
The Medicare trustees project Part B premiums growing about 6% a year through 2031.
523
00:34:23.459 --> 00:34:25.060
Your raise is 3.6.
524
00:34:25.481 --> 00:34:27.402
Your premium grows at about 6.
525
00:34:27.923 --> 00:34:29.164
Call that a raise if you want.
526
00:34:29.504 --> 00:34:32.247
I call it treading water in a pool that's slowly getting deeper.
527
00:34:32.927 --> 00:34:37.272
And as a man with the swimming form of a dropped suitcase, I know how that feels.
528
00:34:37.973 --> 00:34:42.438
Then he drops a number from KFF, the health research group that stopped me cold.
529
00:34:43.019 --> 00:34:49.206
In 2024, about 7 million people on Medicare spent more than 10% of their entire income on the Part B premium alone.
530
00:34:49.706 --> 00:34:53.030
Not the supplement, not the drug plan, not the dentist, just Part B.
531
00:34:53.711 --> 00:35:00.778
Then, almost in passing, he mentions one of the most important things anyone has ever written about this whole boomer housing fight, and I don't think he knows it.
532
00:35:01.258 --> 00:35:06.644
The extra Medicare premium for higher income people is based on your tax return from two years earlier.
533
00:35:06.984 --> 00:35:12.449
So a one-time event, and he named selling a home, can raise your Medicare premiums two years later.
534
00:35:13.430 --> 00:35:16.213
Hold that up against everyone yelling at the boomers to sell.
535
00:35:16.553 --> 00:35:17.354
You sell the house.
536
00:35:17.674 --> 00:35:19.977
The profit lands on your tax return as income.
537
00:35:20.177 --> 00:35:24.821
And two years later, Medicare reads that return, decides you're rich, and raises your premium.
538
00:35:25.262 --> 00:35:25.963
You weren't rich.
539
00:35:26.203 --> 00:35:26.984
You sold your home.
540
00:35:27.364 --> 00:35:30.948
So the system tells them to sell and then fines them for doing it.
541
00:35:31.805 --> 00:35:36.067
Medicare takes its share first, and if you sell the house, it comes back for seconds.
542
00:35:36.747 --> 00:35:40.249
So let's price the healthy version of Dennis and Barb, the one nobody prices.
543
00:35:40.929 --> 00:35:45.351
Part B alone was $135.50 a month back in 2019.
544
00:35:45.652 --> 00:35:47.012
This year, it's $202.90.
545
00:35:47.132 --> 00:35:54.756
That's up by half in seven years, and I don't know anyone whose paycheck went up by half in seven years.
546
00:35:55.795 --> 00:36:00.118
Then the supplement on top so they can keep their own doctor and the drug plan on top of that.
547
00:36:00.498 --> 00:36:02.740
Just the premiums before a single copay.
548
00:36:02.780 --> 00:36:05.302
Call it about $5,000 a year per person.
549
00:36:05.802 --> 00:36:12.547
So $65,000 to $85,000 at today's prices, that's at around $100,000 a person.
550
00:36:12.607 --> 00:36:13.748
$200,000 for the couple.
551
00:36:14.309 --> 00:36:15.950
And nobody's gotten sick yet.
552
00:36:17.112 --> 00:36:24.479
And that's the floor, because the dentist, the hearing aids, and the glasses mostly aren't covered, and the prices only go one direction.
553
00:36:24.960 --> 00:36:33.509
Back in 2019, AARP put the average for everyone on traditional Medicare premiums and care together at more than $6,600 a year.
554
00:36:33.809 --> 00:36:36.291
And that was before Part B went up by half.
555
00:36:36.952 --> 00:36:38.393
That's your inheritance right there.
556
00:36:38.933 --> 00:36:43.595
It's just being paid out monthly to insurance companies instead of in one lump sum to you.
557
00:36:44.115 --> 00:36:45.935
So why don't the boomers just sell the house?
558
00:36:46.616 --> 00:36:48.276
I've told you about the house I grew up in.
559
00:36:48.676 --> 00:36:52.318
It went up a lot in value when people looked at it and assumed we were living large.
560
00:36:52.798 --> 00:36:53.198
We weren't.
561
00:36:53.638 --> 00:36:55.479
You don't live large on home appreciation.
562
00:36:55.519 --> 00:36:57.300
An expensive house is not cash.
563
00:36:57.680 --> 00:37:02.882
The only way my folks ever got a dollar out of that house was to borrow against it, and they did that to put us kids through college.
564
00:37:03.722 --> 00:37:05.808
That's what the equity is for most boomers.
565
00:37:06.209 --> 00:37:10.500
It's the one thing they own that can cover a big bill at the end.
566
00:37:11.435 --> 00:37:15.077
So let's walk through what happens if they sell it early to make the hoarder crowd happy.
567
00:37:15.677 --> 00:37:16.997
First, the government takes a cut.
568
00:37:17.418 --> 00:37:24.081
A married couple can shield $500,000 of profit on a home sale from capital gains tax, and a single person, $250,000.
569
00:37:24.321 --> 00:37:27.002
That number was set in 1997 and has never moved.
570
00:37:27.382 --> 00:37:28.763
Bill Clinton signed that number.
571
00:37:29.103 --> 00:37:30.083
Bill Clinton.
572
00:37:30.624 --> 00:37:33.185
That number is older than a lot of people calling boomers hoarders.
573
00:37:34.068 --> 00:37:38.932
Congress has had almost 30 years to update it, and that time they've found plenty of time to rename post offices.
574
00:37:39.613 --> 00:37:41.835
For Dennis and Barb, $600,000.
575
00:37:42.175 --> 00:37:49.622
That shield mostly covers them, but a lot of couples who bought in the 80s in Portland or Bend or anywhere on the West Coast are sitting on a million or two.
576
00:37:50.555 --> 00:37:57.977
Everything over the line gets hit with 15 or 20% federal, a surtax on bigger gains, and here in Oregon, almost up to 10 more.
577
00:37:58.537 --> 00:38:05.019
Call it closer to 30 cents of every dollar of profit over the line gone to the government on money they're going to need for their nursing home.
578
00:38:05.359 --> 00:38:08.040
In this next part, you have to laugh so you don't cry.
579
00:38:08.540 --> 00:38:12.941
If one of them dies in the house, the tax code wipes out the gain on that spouse's half.
580
00:38:13.281 --> 00:38:18.403
So the government spends all day telling boomers to sell and then rewards them for dying in the house instead.
581
00:38:19.178 --> 00:38:24.245
Second, the sale lands on their tax return, and Medicare raises their premiums two years later.
582
00:38:24.986 --> 00:38:29.413
And third, they have to live somewhere, and the downsized condo isn't free.
583
00:38:29.833 --> 00:38:32.577
In a lot of places, it costs as much as the house they just sold.
584
00:38:33.276 --> 00:38:38.777
Congratulations, you paid a capital gains tax and a Medicare surcharge for the privilege of less closet space.
585
00:38:39.257 --> 00:38:40.778
So why on earth would they sell?
586
00:38:41.058 --> 00:38:46.679
Write a check to Washington and Salem and then need every penny that's left for their care a few years later?
587
00:38:47.419 --> 00:38:49.640
Run every move a boomer has on the board.
588
00:38:50.040 --> 00:38:52.100
Sell the house and you're taxed and surcharged.
589
00:38:52.380 --> 00:38:53.721
Keep the house and you're a hoarder.
590
00:38:54.081 --> 00:38:55.541
Take a trip and you're skiing.
591
00:38:55.821 --> 00:38:59.462
Hand the money to the kids early and Medicaid looks back five years later.
592
00:38:59.802 --> 00:39:02.963
Spend it on your own care and the kids say you blew their inheritance.
593
00:39:03.563 --> 00:39:04.824
Show me the innocent move.
594
00:39:05.584 --> 00:39:06.805
Apparently there isn't one.
595
00:39:07.505 --> 00:39:08.986
And then there's the last stop.
596
00:39:09.466 --> 00:39:17.070
When the money finally runs out, Medicaid will pay for the nursing home, but only after you've spent down to about $2,000 or less.
597
00:39:17.170 --> 00:39:22.552
And since 1993, federal laws required states to try to get that money back after you're gone.
598
00:39:22.993 --> 00:39:24.653
It's called estate recovery.
599
00:39:24.693 --> 00:39:27.715
And very often what they go after is the house.
600
00:39:29.197 --> 00:39:31.040
So the house goes to the care either way.
601
00:39:31.381 --> 00:39:35.909
Either the family spends it on care or the state pays for the care and then takes the house as a receipt.
602
00:39:36.530 --> 00:39:39.495
Spend it all and when you're gone, we'll come for the house anyways.
603
00:39:39.575 --> 00:39:40.297
That's the deal.
604
00:39:40.637 --> 00:39:42.561
The safety net comes with a repo, ma'am.
605
00:39:43.476 --> 00:39:46.238
Ladies and gentlemen, that's the elephant in the room.
606
00:39:46.918 --> 00:39:48.319
The Boomer House isn't a hoard.
607
00:39:48.579 --> 00:39:50.221
It's a care plan with a front porch.
608
00:39:50.541 --> 00:39:53.403
The coverage everybody thinks their parents have doesn't exist.
609
00:39:53.703 --> 00:39:55.804
The coverage they do have shrinks every fall.
610
00:39:56.065 --> 00:39:58.546
Selling the house gets them taxed and surcharged.
611
00:39:58.606 --> 00:40:03.109
And the only thing standing between your parents and a Medicaid spend down is the equity in that house.
612
00:40:03.790 --> 00:40:04.910
Quite cash rich.
613
00:40:05.371 --> 00:40:08.153
On paper, right up until the health care bill comes due.
614
00:40:08.733 --> 00:40:13.301
So when the hoarder crowd asks why they won't sell, the honest answer is because they're going to need it.
615
00:40:13.722 --> 00:40:17.709
And they might be the only people in this whole conversation who've actually done that math.
616
00:40:18.430 --> 00:40:19.672
Did you subtract their care?
617
00:40:20.567 --> 00:40:21.307
Because they did.
618
00:40:21.327 --> 00:40:24.268
The first warning is to the kids waiting on the inheritance.
619
00:40:24.328 --> 00:40:26.208
And I'm the kid of two boomers, too.
620
00:40:26.528 --> 00:40:29.389
Do the health care math before you spend a dime of that money in your head.
621
00:40:30.149 --> 00:40:34.350
The healthy version is $200,000 in premiums alone for Dennis and Barb.
622
00:40:34.710 --> 00:40:37.151
One bad diagnosis is a few hundred thousand more.
623
00:40:37.431 --> 00:40:39.211
Five years in a nursing home is the house.
624
00:40:39.491 --> 00:40:43.872
So for a lot of middle class families, the most likely inheritance isn't a house.
625
00:40:44.213 --> 00:40:47.153
It's a box of photo albums and a really good casserole dish.
626
00:40:47.413 --> 00:40:48.794
And it's a great casserole dish.
627
00:40:49.094 --> 00:40:50.094
Fight your sister for it.
628
00:40:50.734 --> 00:40:53.116
So build your own retirement like nothing is coming.
629
00:40:53.477 --> 00:40:55.798
If something does come, it's a gift, not a plan.
630
00:40:55.839 --> 00:40:58.401
And inheritance isn't a retirement plan anyways.
631
00:40:58.481 --> 00:41:00.102
It's a lottery ticket that ages.
632
00:41:00.843 --> 00:41:04.306
The second warning is to the boomers, and it's the one I care about most.
633
00:41:04.886 --> 00:41:08.890
Plan for this now, and whatever you do, do not fold to this pressure.
634
00:41:09.370 --> 00:41:14.372
You've heard it all hour, hoarding, clogging the market, spending the kids' inheritance on cruises.
635
00:41:14.812 --> 00:41:17.234
Hear that long enough and a lot of boomers start to believe it.
636
00:41:17.534 --> 00:41:18.814
Maybe I am being selfish.
637
00:41:19.074 --> 00:41:20.055
Maybe I should sell.
638
00:41:20.295 --> 00:41:22.316
Maybe I should hand some of it to the kids now.
639
00:41:23.236 --> 00:41:25.477
And that pressure isn't coming from the left.
640
00:41:25.837 --> 00:41:27.738
It's coming from our side of the aisle, too.
641
00:41:28.319 --> 00:41:37.783
This summer, The Federalist, a conservative outlet, ran a piece by Casey Chalk headlined, Boomers Should Give Their Life's Earnings to Their Kids Not Making a Slow Death Last Longer.
642
00:41:38.982 --> 00:41:40.283
And there's a lot in it I agree with.
643
00:41:41.163 --> 00:41:43.604
He opens with the same pile everyone opens with.
644
00:41:43.964 --> 00:41:48.366
More than half of wealth, 68 trillion dollars, blah, blah, blah.
645
00:41:49.206 --> 00:41:55.589
Then he says those estimates probably ignore the rising costs of growing old and backs it up with the same Washington Post numbers we already talked about.
646
00:41:56.150 --> 00:41:56.590
He's right.
647
00:41:57.230 --> 00:42:07.955
So now the Washington Post, a progressive think tank, and a conservative magazine are all looking at the same numbers and agreeing most families will have very little left to pass down when those three agree the math is settled.
648
00:42:08.735 --> 00:42:14.704
Then he says the younger generations may get a little or nothing because most of the money is going to health and elder care industries.
649
00:42:14.984 --> 00:42:17.548
Yes, again, that's this whole episode in one sentence.
650
00:42:17.748 --> 00:42:20.172
He found the same elephant in the room I did about the boomers.
651
00:42:21.153 --> 00:42:25.176
But then his piece turns into something I didn't expect, and I liked a lot of it.
652
00:42:25.937 --> 00:42:27.458
He says families have drifted apart.
653
00:42:27.578 --> 00:42:32.802
Grandparents retired a bridge and pickleball and beach towns hours from grandkids, and it gets lonely.
654
00:42:33.282 --> 00:42:40.048
And he talks about his own mother, retired, living three miles away, coming by most days, driving their kids to activities, helping with their schooling.
655
00:42:40.088 --> 00:42:42.810
And one day those kids will be the ones helping her.
656
00:42:43.450 --> 00:42:44.011
I love that.
657
00:42:44.451 --> 00:42:45.812
That's the best part of the piece.
658
00:42:45.912 --> 00:42:48.274
Grandma three miles away is worth more than grandma's 401k.
659
00:42:49.756 --> 00:42:54.800
But then I go back to the top because the headline and the line under it are what most people actually read.
660
00:42:55.400 --> 00:43:05.568
And the line under the headline reads, Thanks to prolonging an inevitable end through expensive interventions, younger generations may see little of the money their parents and grandparents saved.
661
00:43:06.401 --> 00:43:07.461
Listen to what that does.
662
00:43:08.082 --> 00:43:09.702
Prolonging the inevitable end?
663
00:43:10.282 --> 00:43:12.143
Making a slow death last longer?
664
00:43:12.723 --> 00:43:16.845
In that sentence, your mother's assisted living care isn't care anymore.
665
00:43:17.285 --> 00:43:18.946
It's a waste of kids' money.
666
00:43:19.646 --> 00:43:21.266
Tell that to the man in memory care.
667
00:43:21.927 --> 00:43:24.528
Excuse me, sir, you're prolonging the inevitable?
668
00:43:25.048 --> 00:43:25.928
Could you hurry it up?
669
00:43:25.988 --> 00:43:28.109
Your grandson has his eye on a new Tesla.
670
00:43:28.889 --> 00:43:36.186
And then he ends the piece with a line and again, quoting, don't throw your retirement money at strangers, strangers.
671
00:43:37.279 --> 00:43:38.880
Let me tell you who those strangers are.
672
00:43:39.420 --> 00:43:44.484
The stranger is the aide who comes at seven in the morning to help your dad shower because he's too proud to let you do it.
673
00:43:45.064 --> 00:43:51.829
The stranger is the night nurse in memory care who knows your mother takes her tea with two sugars and sits with her when she doesn't remember your name.
674
00:43:52.549 --> 00:43:56.832
Those strangers are the reason a lot of our parents get to finish their lives with some dignity.
675
00:43:57.293 --> 00:44:00.095
That's the most important check your parents will ever write.
676
00:44:00.635 --> 00:44:01.496
Those aren't strangers.
677
00:44:01.856 --> 00:44:04.478
That's who's holding your mother's hand on the nights you can't.
678
00:44:05.118 --> 00:44:08.361
I'm a yes on his diagnosis and a yes on living near your family.
679
00:44:08.701 --> 00:44:12.945
I'm a hard no on the headline because the headline is exactly the pressure I'm worried about.
680
00:44:13.185 --> 00:44:14.626
And it's coming from my own side.
681
00:44:15.147 --> 00:44:17.889
And I want every boomer watching to hear this part slowly.
682
00:44:18.670 --> 00:44:21.952
If you give the money away early and then need care, there's a trap waiting.
683
00:44:22.313 --> 00:44:28.098
When the money runs out and you turn to Medicaid for the nursing home, Medicaid looks back five years at everything you gave away.
684
00:44:28.518 --> 00:44:33.984
Hand the kids a big check or sign over the house inside that window, and Medicaid can make you wait before it pays.
685
00:44:34.384 --> 00:44:36.667
And you can't wait in a nursing home for free.
686
00:44:37.167 --> 00:44:40.491
And there's a second trap for the kids who pushed for the early handout.
687
00:44:40.891 --> 00:44:45.817
Roughly half the states still have laws on the books that can make adult children pay for a parent's care.
688
00:44:46.197 --> 00:44:53.047
They're rarely used, but in 2012, a court in Pennsylvania ordered a son to pay about $93,000 for his mom's nursing home bill.
689
00:44:53.507 --> 00:44:58.855
So the kid who pushed mom to hand over the inheritance early can end up handing her bill instead.
690
00:45:00.051 --> 00:45:01.673
The selfish thing isn't keeping the house.
691
00:45:01.753 --> 00:45:05.136
The selfish thing is caving and leaving your kids to pay your tab.
692
00:45:05.777 --> 00:45:07.219
So boomers plan for this now.
693
00:45:07.559 --> 00:45:09.982
Find out what your Medicare really covers and what it doesn't.
694
00:45:10.422 --> 00:45:12.805
It takes one afternoon, two phone calls, and a glass of wine.
695
00:45:13.145 --> 00:45:13.766
Maybe the bottle.
696
00:45:14.206 --> 00:45:19.632
Sit down with someone who knows elder law before you sell or sign anything over and keep the house.
697
00:45:20.153 --> 00:45:20.913
It's not a hoard.
698
00:45:21.314 --> 00:45:22.075
It's your plan.
699
00:45:23.108 --> 00:45:32.231
And the third warning is to the hoarder crowd, the people calling boomers selfish, the people waiting on the will, the people complaining their parents are clogging up every market in America.
700
00:45:33.172 --> 00:45:39.494
If you're 32 and renting with no path to owning anything, you look for somebody to blame, and the guy in the four-bedroom house is right there.
701
00:45:39.554 --> 00:45:39.934
I get it.
702
00:45:40.534 --> 00:45:42.275
But that money is already spoken for.
703
00:45:42.675 --> 00:45:45.676
Most of it was earmarked for care before you ever started counting it.
704
00:45:46.136 --> 00:45:49.938
It's going to the aid and the facility and the premiums and the night nurse who knows grandma.
705
00:45:50.955 --> 00:45:55.638
And when it does, you're going to be glad it was there because the alternative is that bill coming to you.
706
00:45:56.819 --> 00:45:58.360
You want to know who's really sitting on that money?
707
00:45:58.980 --> 00:45:59.740
The nursing homes.
708
00:46:00.261 --> 00:46:02.202
And it isn't hoarding it, it's billing it.
709
00:46:03.079 --> 00:46:05.640
Your folks borrowed against their house to pay our tuition.
710
00:46:05.740 --> 00:46:07.820
Yours are about to spend theirs on their own care.
711
00:46:07.960 --> 00:46:09.141
Neither one of those is hoarding.
712
00:46:09.761 --> 00:46:16.943
So the next time somebody tells you your parents are quite cash rich, ask them how many months of memory care that buys.
713
00:46:17.583 --> 00:46:29.246
And the next time you feel the urge to call your parents hoarders, think about Conrad Miles, the railroad man who saved $200,000, spent it on the care he needed, and apologized to his daughters at the end for not having anything to leave them.
714
00:46:29.926 --> 00:46:32.228
Nobody should ever have to apologize for that.
715
00:46:32.748 --> 00:46:34.549
Folks, it was never the cruise.
716
00:46:35.210 --> 00:46:37.011
It was always the care.
717
00:46:37.711 --> 00:46:40.333
Everything I do lives at chadparkerlaw.com.
718
00:46:40.413 --> 00:46:46.417
All three of my books, the free life guide, the common sense conservative manifesto, and the gaily news.
719
00:46:47.298 --> 00:46:51.341
I'm Chad Law, the last gay conservative with a face for radio in a video decade.
720
00:46:51.661 --> 00:46:54.423
And America, that was common sense.
721
00:46:54.603 --> 00:46:56.284
See you back tomorrow for Monologue Monday.
722
00:47:07.582 --> 00:47:07.803
you