The U.S. Census notes that there are more than 77 million American baby boomers, born right after the post-World War II “Baby Boom,” and many of them will have longer lifespans than their own parents. The average male baby boomer who’s at least 75 can expect to live until age 86 — that number is 88 years old for boomer women, four years longer than the previous generation, according to U.S. News.
There’s a drawback to these promising stats. Though living longer means living healthier, it can also mean a time will come when members of the growing boomer population will place a strain on our health care and social security systems, and possibly use up what retirement savings they have. Consequently, some of the costs to care for boomers in their later years could be passed on to their children, some of whom have already opened up their homes to let their aging parents live with them. According to the AARP, 4.05 million parents lived with an adult child six years ago; just three years ago, that amount had risen 13.7 percent.
If you’re a recent boomer, check out some of the following tips to help you cut costs and save more money, so you can avoid becoming financially dependent on your children.
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How Baby Boomers Can Avoid Passing on Costs to Their Kids
1. Size up Scaling Down
Buying a smaller house or condo can go a long way to helping you save money on utilities, property taxes and mortgage payments. If your current dwelling is already paid off, you can use the proceeds from its sale to purchase something cheaper. Your remaining capital can then be invested into a high-yield savings or investment account, earning interest as a buffer to cover your living or medical expenses without the need for financial help from family.
2. Pay Down Your Debts
Similar to tip No. 1, if your house is paid off, the best-case scenario is to sell it, using the principal to buy a more affordable residence, with some leftover money in the bank. Work out a budget and try allotting some of these funds toward paying down other outstanding debts, like a car loan or credit cards. Set a goal: Try to be debt-free by 70. Then, strive to pay for all future bigger-ticket buys with cash. Minimizing your debts means avoiding placing them in the hands of loved ones.
3. Spread Out Finances Without Spreading Too Thin
If your debt is too large, or home/car ownership is several years of debt away, consider other avenues to saving money. If you’re divorced or widowed, find roommates to share expenses, or split monthly rent/mortgage payments. Also consider applying for state aid to help pay for utilities and other necessities, and investigate if your city offers any type of housing for low-income or senior residents.
4. Make Use of Medicare
This tip is a must for anticipating health care expenses. If you’re a baby boomer, you’ll become eligible for this government-sponsored health insurance when you’re 65. There are several different elements to Medicare, but usually, it covers 80 percent of all outpatient doctor’s visits or expenses; the remaining 20 percent of this “co-insurance” is out of pocket. For inpatient hospital stays, Medicare pays for the first 60 days. If you don’t have your own private insurance, Medicare should cover you for everything from surgical procedures to a flu shot.
5. Embrace Senior Discounts, Clubs and Other Perks
Every person of baby boomer age will qualify for the senior citizen discount wherever it’s offered. Be proud that you qualify and start taking advantage of it! Check every avenue as a way to pull out all the savings stops. Become a card-carrying member of AARP. Inquire about the senior discount anywhere you dine or travel. Consult with your auto insurer when it’s time to renew your premium. Even getting tickets for a trip to the movies at senior matinee prices can go a long way over time to conserving finances.
6. Start the Estate/Funeral Planning Ball Rolling
Yes, it’s an uncomfortable topic to think about and discuss, but necessary. If money is a problem while you’re living, it will be a problem when it comes time to pass on. Funeral expenses can be very costly and a huge burden on surviving, grieving family members who are left to foot the bill. Consider a number of money-saving avenues, like prepaid funerals, local, state or nonprofit burial aid, or a special end-of-life savings fund. Also, don’t be afraid to discuss your plans with your children and survivors; your transparency expresses that you care for their welfare, and yours, personally and financially.
7. Don’t Become Financially Stagnant
What does this mean exactly? By now, if you’re retiring or nearing retirement, you’ve presumably had a savings plan in place for years, if not decades. But don’t overlook new ways of investing or saving money just because you’ve partially or fully stopped working. See how you can divert some of your finances into higher-yield deposit accounts, like CDs or money markets. Look into a health savings account as a way of supplementing your medical expenses. Are you investing in other stocks, bonds, annuities and the like? If you don’t have a financial advisor, look into one — they can help you make the most out of your money depending on where the market is at the moment.
Above all, take note that it’s OK to ask your children for help if it’s absolutely needed — but these tips should be a starting point to begin preparing you for the years ahead. They’re not just for baby boomers, either; anyone of any age can start preparing for their retirement years, even if they’re decades away. Think of it as a case of great optimism toward years of financial and physical health.
Photo credit: Quinn Dombrowski