According to the "Center for Retirement Research at Boston College", the current high costs of long-term health care will drag down the quality of life for nearly two-thirds of today’s retirees. The center released a new report with some chilling data It can cost as much as $77,000 a year for a nursing home room and $20,000 for in-home care. These are costs that are becoming more and more difficult for the average person to absorb. Recent analysis shows that when the cost of health care and long-term care is included, 64 percent of retirees will not be able to uphold their current standards of living.
Current events, like the sharp decline in the Stock Market since 2007, have proven to show just how ill-prepared people are for their retirement expenses. "The cost of health care will create such an unexpected hardship on unprepared retiring baby boomers that it’s imperative to sound the warning now", says Alicia Munnell, director of the Center for Retirement Research. It's unfortunate, but it is the reality of the situation nowadays.
Munnell, like many other people, has been concerned for years about the impending retirement crisis caused by a combination of problems. These problems include inadequate personal savings, a Social Security system that will likely fail to provide current levels of support and rapidly rising health care costs. These are all very serious issues by themselves, coupled together they create a perfect storm of health care crisis.
The harsh reality is; people spend too much, borrow excessively and save too little. This has left a generation unprepared for retirement and shell-shocked by the current economic downturn. Over the past 20 years their has been very aggressive consumption rates and high levels of indebtedness. We are going to have to face a period of some serious behavioral changes and social/economic sacrifices. Restraints on consumption and a push on higher savings will be needed in order to begin to relieve some of the pressure on retirees and those in need of long term care. Along with higher savings and less debt, the health care industry in general needs solutions that can drive down costs all the while maintaining the level of care that is appropriate.
This overall dilemma shows that their is much blame to go around, and no clear or easy solution. Changes, sacrifices, and ideas are needed on all fronts and will have to be executed appropriately. People need to manage their own finances better, and the health care industry along with the government and private companies need to find ways to drive down costs.
Reference Article:
http://www.ajc.com/services/content/printedition/2009/04/05/pfcare0405ze.html
