Don’t Call It the Silver Tsunami
The term Silver Tsunami refers to the generation that is currently 65 and older and is quickly approaching the age of retirement like (for lack of a better term) a wave.1 While many dislike the name for its negative connotation toward some of our most distinguished members of society, it nonetheless illustrates the overwhelming reality that its members face: if you are in or nearing retirement, you must make plans for your care as you age, and you need a plan for how to pay for it.
This includes creating actionable plans with whoever would be responsible for your care should you not be able to live independently. It also involves creating a financial plan designed around the unique financial challenges that come with retirement. Most people who enter retirement are entering a new phase of their life— what was once asset accumulation now becomes asset preservation and asset distribution.
According to Sheila Weinstein in Psychology Today, the term Silver Tsunami was coined in reference to a statistic that claims the number of people over 65 is expected to increase from 40 million in 2010 to 55 million in 2020.2 Approximately 3.5 million people will hit this milestone each year until 2030, by this time one-fifth of all Americans will be over age 65.3
To make matters more complicated, 65 isn’t as old as it used to be and those approaching retirement are required to plan farther ahead than ever before. Today, the average life expectancy for a 65-year-old American is 17.7 years for a male and 20.3 years for a female. That means that even if you are 75 years of age, you can expect to live another 11 years if you’re a man, 13 years if you’re a woman.4
If you are in your 40s or 50s, this message is for you as well. The average age of a caregiver is 48.5 Many refer to this time of your life as being sandwiched between caring for the generations before and after you. Consider some sobering statistics from a phone survey conducted by Ameriprise of 1,000 people aged 47-65 with $100,000 or more of investible assets:
- More than half of all boomers (58%) help their parents with daily household tasks and home maintenance.
- Many are contributing for groceries (22%), medical bills (15%) and helping their parents with monthly utility bills (14%).
- Ten percent of boomers have even said that helping their own parents has hindered their retirement savings efforts.
This leads us to an uncomfortable truth that must be addressed about the long-term wellness of you and your family: Who will look after you when you’re older? The question of future care should not be taken lightly. Most often in families, the spouse does the majority of caregiving. If and when the spouse dies, those responsibilities are then passed onto the child, or to the family member who lives closest. Consider the following facts when planning for yours and your family’s care:6
- The close relationship between the caregiver and care recipient is a shared relationship with involved emotions, experiences and memories, which can place a caregiver at higher risk for psychological and physical illness.
- Seventy percent of working caregivers suffer work-related difficulties due to their dual caregiving roles.
- Caregivers suffer loss of wages, health insurance and other job benefits, retirement saving or investing and Social Security benefits- losses that hold serious consequences for the “career caregiver.”
- Thirty-seven percent of caregivers quit their jobs or reduced their work hours to care for someone age 50+ in 2007.
Caring for those older than you won’t be your only challenge, however; you will eventually have to plan how to take care of yourself in the long run as well. The duration and level of long-term care will vary from person-to-person and often change over time. Here are some statistics to consider (all are on average):6
- Someone turning age 65 today has almost a 70% chance of needing some type of long-term care services and support in their remaining years.
- Women need care longer (3.7 years) than men (2.2 years).
- One-third of today’s 65 year-olds may never need long-term care support.
- One-fifth will need long term care support for longer than 5 years.
Retirement is a complicated issue, one where emotions often reign. This makes it challenging for families and individuals alike to gain solid footing in their financial planning.
If you or one of your loved ones count themselves among the Silver Tsunami nearing retirement, consider building a relationship with a financial advisor to act as your financial advocate. Having a professional on your side who is specially trained in the nuances of financial planning and benefits like Medicare can be a valuable resource should you have questions about what retirement options are best for you.
If you’re looking for a good place to start preparing for retirement, we’re here to help.
1) Toland, B. (2014, December 21). “Baby boomers creating ‘Silver Tsunami’ in workforce.” Pittsburg Post Gazette. Retrieved from http://www.post-gazette.com/business/career-workplace/2014/12/21/Baby-boomers-creating-Silver-Tsunami-in-workforce/stories/201412210003.
2) Weinstein, S. (2015, April 2). “The ‘Silver Tsunami’, Choosing how and where we age.” [Web log post]. Retrieved from https://www.psychologytoday.com/blog/what-do-i-do-now/201504/the-silver-tsunami.
3) Silverbook.org. “The Silver Book, Infectious diseases and prevention through vaccination.” Retrieved from http://www.silverbook.org/uploads/images/SilverBookInfectious.pdf
4) Sightings, T. (2014, July 22). “12 Baby Boomer retirement trends.” Retrieved from http://money.usnews.com/money/blogs/on-retirement/2014/07/22/12-baby-boomer-retirement-trends
5) The National Alliance for Caregiving and AARP. (2012, December 31). “Caregiving in the U.S. National Alliance for Caregiving”. Retrieved from https://caregiver.org/selected-caregiver-statistics
6) United States. Department of Health and Human Services. (2015) “How much care will you need?” Retrieved from http://longtermcare.gov/the-basics/how-much-care-will-you-need/
Tags: Baby Boomers, Certified Financial Planner, CFP, Financial Planning, Generation X, Income Planning, Kentucky, KY, Louisville, R. Travis Terlau, retirement planning, Sandwich Generation, Seniors, Silver Tsunami, Travis Terlau