In a pickle over how to support your adult children and care for your aging parents while also securing a stable retirement for yourself? You're not alone.
This demographic of baby boomers is also called "the sandwich generation" and has its own particular dilemmas when it comes to financial planning for the future. Sandwich boomers may be simultaneously struggling with how to pay for college for their children while wondering how to help their parents fund nursing home care -- and stressing out over an inadequate retirement plan for themselves.
The National Association of Insurance Commissioners (NAIC) has joined the chorus of financial advisers warning boomers to start preparing for retirement, the sooner the better. A major component of that is making sound insurance decisions, says the NAIC. By doing so, the 76 million Americans considered boomers, those born between 1946 and 1964, can decrease their future financial risk.
"Securing affordable health insurance is one of the greatest obstacles to retiring before age 65, when you are eligible for full Medicare coverage, but there are several options to consider," says Kevin McCarty, NAIC president and Florida insurance commissioner, who says that about 2.5 million boomers turned 65 last year.
The NAIC has these suggestions:
Still, it may be wise to evaluate LTCI options because Medicare typically only covers about 2 percent of nursing home costs and private health insurance pays for only about 1 percent of nursing home costs. Depending on your income and assets, you may be eligible for your state's Medicaid program, which will cover some long-term care expenses.
It's also recommended that you buy an LTCI policy sooner than later, ideally before age 60, because premiums and health risks rise as you grow older. However, since 79 is the average age at which people enter a nursing home, according to the NAIC, make sure you can afford the premiums for an extended period of time. (See: "Tips for buying long-term care insurance amid rising rates.")
Before buying a long-term policy, the NAIC recommends you research the company and agent to make sure both are licensed in your state. Also, determine if your state participates in the Long-Term Care Partnership Program, which allows private long-term care insurance coverage while maintaining Medicaid eligibility.
The NAIC says 71 percent of boomers have at least one living parent, and about 13 percent are raising a child while financially helping their parents. Nearly 10 million boomers over 50 are caring for a parent. There are ways to ease the financial burden, according to the association:
Under health reform, children may stay on their parents' health insurance plans until age 26. Additionally, if your child no longer depends on you financially, then it's a good time to review your life insurance policy. You may be able to save money by reducing your life insurance coverage.
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