The study, Middle-Income Boomers, Financial Security and the New Retirement, which focused on 500 middle-income Americans between ages 47 and 65 with income between $25,000 and $75,000, found that the pensions and guaranteed income are what the majority (60 percent) of middle-income Baby Boomers envy most about the retirement of previous generations.

The ideas of being taken care of by family members, slowing down and moving to a retirement community, (activities commonly associated with the retirement of previous generations) are being replaced by keeping up with technology (77 percent), working (78 percent) and staying physically fit (81 percent).

The CSR's study reveals, nearly one in three (31 percent) Boomers anticipate having to financially support at least one adult person during retirement and 15 percent expect that person will be an adult child or children, rather than an elderly parent (only 9 percent).

There are several factors contributing to this change in retirement outlook. According to the study, retirement risk has been shifted from employers and the government to individuals with the demise of corporate pension plans in favor of 401(k) plans, discontinuation of many employer-paid retiree health benefits and the future of Social Security and Medicare.

Today, just over half (56 percent) of middle-income Boomers work for an employer that offers a retirement savings plan. This is less than the national average for all workers (72 percent). And of those who contribute to a retirement plan at work, one in four (24 percent) do not receive a match from their employer.

The report also cites one in seven have no pension or retirement accounts at all and 55 percent of middle-income Boomers have saved less than $100,000.

"The retirement of the Baby Boom generation will not only test the limits of government programs such as Medicare and Social Security, but also help shape the definition of retirement itself," said Scott Perry , president of Bankers Life and Casualty Company, a national life and health insurer. "Boomers may have to take more personal responsibility for their retirement financial security than was the case of their parents' generation and plan for the risks that may jeopardize this security, like long-term care, inflation and outliving their money."

The federal government plans to cut $16 billion of funding out of Medicare for nursing home care over the next ten years.  In addition, the U.S. House of Representatives will vote on cutting $45 billion out of Medicare funding as part of their proposed health care “reform” legislation.  The combined impact of these cuts with the shrinking dollars in every state to fund Medicaid budgets is the greatest threat to quality of care for our nation’s seniors in history. 

Seniors rely on Medicare to fund short term rehabilitation services provided by nursing homes, and many rely on Medicaid to fund long term residency in a nursing home.  The amount of money these programs pay barley cover the true costs of housing and care, and nursing homes are forced to operate on dangerously thin margins.  Further cuts to their budgets will have an immediate and negative impact on the quality of care that it is possible to provide.  Nursing homes and long term care services are often large employers in local communities, and these cuts will also have a negative economic impact for towns across the United States. 

Studies have shown that many people are unaware of the differences between Medicare and Medicaid and how long term care in a nursing home or assisted living environment is paid for.  As government budgets continue to be stretched thin by shrinking tax dollars and a growing senior population, the burden to pay for the costs of housing and care for seniors will continue to be pushed back on the individual.  The unfortunate truth is that as more and more baby boomers age and require long term care, their will be fewer dollars available to pay for these rising costs.  Every family should take the time to understand how the system works, and put their own plan in place for how they will pay for themselves, or for loved ones when the time comes.

To read more about budget cuts, click here.

UPDATE: Medicare cuts could cost 1,960 jobs in Florida

In a recent commentary for CNN Politics, Bob Greene wrote a very compelling piece about the economic injustice currently being done to our nation’s senior citizens.  In it he observes that the mantra being repeated in the media to keep everyone from jumping off a cliff is to “wait out the storm”.  We are reminded of the conventional wisdom that economic busts and booms are cyclical, but that in the long term the stock market will steadily increase in value and after a few years people will recover their losses. 

But as readers of this blog know, we have been reminding people that our seniors don’t have that time to wait.  Many are in situations where they need the money from their investments or the sale of their home right now to pay for things such as senior housing and care.  If that money has evaporated ($11 trillion of wealth in America has disappeared in the last year alone!) what will people do if it is no longer safe or possible for them to live without assistance?  The people who built this country, fought its wars, and made our prosperity possible are now the ones left holding the bag. 

Mr. Greene is absolutely correct when he says it is unfair to force this generation to sacrifice again-- just when they should be able to enjoy a peaceful retirement in safe and nurturing surroundings.  Fortunately, there are options that our nation’s seniors and their family can turn too for financial security.  There are Funding Solutions that can be accessed to help ease the hardships of this economic calamity.  We have been writing about this situation and the potential solutions for a long time.  Kiplinger’s Retirement Report (March, 2009) issued an excellent resource analyzing this crisis situation and in it, they discuss Funding Solutions from companies such as Life Care Funding Group (see page 4).

 To read the commentary by Bob Greene, “We owe oldest Americans an apology”, click here.

Surveys have found that the economic crisis is discouraging or outright scaring people away from saving for their future needs.  Many are looking at the daily headlines and are afraid to put money away and watch it shrink or disappear.  Others can not afford to save as they try to keep up with the costs of daily living. Compounding the decline in our nation’s already anemic 1% saving rate is the rise in unemployment and the loss of investment income and home equity. 

This trend will have a harsh impact on seniors as they begin to enter the “Senior Living” stage of their lives and need to move into some form of assisted living. Most people do not understand the costs associated with the kinds of housing and care they expect to receive in the future.  Many do not know the differences between Medicaid, Medicare, and Social Security.  Most people do not have long term care insurance, and for those that do they have seen significant disruptions and rate increases with their policies. It is important that people not bury their heads in the sand and wait for everything to return to “normal”.  

Now is the time to take action and seek information about “Senior Living” and the various financial options.  It is also important to have a realistic understanding of the costs involved and where the money is coming from.  It would be a mistake to assume the government is going to take care of everything—and then find out too late that it doesn’t work like that. There are very specific requirements to qualify for Medicare and Medicaid and limitations to what those programs will cover. Also, these entitlement programs are not a free ride and there are expenses associated with both.  

More and more emphasis is being placed back on the individual to shoulder the burden of paying for senior housing and long term care.  There are many “Funding Solution” programs for seniors and now is the time to be researching options and planning for the future—because the future always seem to come when you least expect it and at the most inconvenient times. 

To read more about the decline in savings and financial confusion, click here.

A report released on December 15^th shows that $2 trillion in the value of American home owners evaporated in 2008.  A report released by the National Association of Home Builders in June of this year showed $500 billion lost in home values at that time.  But now, 11.7 million home owners are carrying mortgages considered “underwater” because they owe more on their homes than they are worth.  The combination of negative equity and a continuing surge of foreclosures flooding the market have caused the loss of home values in the U.S. to accelerate by a factor of 3X in the last six months.

Home values have been declining for eight consecutive quarters and with projections of foreclosures and continuing declines in equity “with no end in sight”; there is no projection yet for when the market will begin to turn around.  The problem is that the real estate market is already flooded with undervalued and foreclosed homes and there are many more to come in the months ahead.  Compounding this problem is the ongoing struggles on Wall Street and increasing numbers of unemployed.

Seniors and their families that are counting on the sale of their home and/or their savings invested for the future are being hit particularly hard by this culmination of negative factors.  When money from the sale of a home or income from investments can not be counted on; seniors and their families must educate themselves about financial alternatives to pay for senior housing and care.

In the last month two reports came out that should be of concern to seniors and their families.  Just this past week the Federal Reserve released their economic projections through 2009 anticipating Gross Domestic Product (GDP) for the U.S. may contract by as much as a full percentage point.  We are watching what the Secretary of the Treasury recently described as a “once in a Century” tumult in the U.S. economy.  The impact on unemployment could be alarming with the unemployment rate of 4.5% last year jumping to 7.6% next year which would be the highest levels in two decades.

In October, the annual MetLife Mature Markets study was released and it highlighted the continuing increase in the costs of senior housing and care.  The national average cost of staying in a semi-private room in a nursing home grew from $189 per day / $68,985 annually in 2007 to $191 per day / $69,715 annually in 2008. The national average cost of living in an assisted living facility grew from $2,969 per month / $35,628 annually in 2007 to $3,031 per month / $36,372 annually in 2008. 

When you combine the impact of an economy in a true crisis that will take at least a couple of years to sort out, and the cost impact of living in a nursing home or assisted living community; it starts to become obvious why families must do all they can to inform themselves of all their financial options.  Our best advice to the people we speak with-- don’t wait until you are in a crisis to start planning for the future.  Start now!

Click here to read more details about the MetLife Mature Markets Study 2008.