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Nancie Clare It's Not Nice to Scare the Baby Boomers
Nancie Clare It's Not Nice to Scare the Baby Boomers| It's Not Nice to Scare the Baby Boomers |
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I came across an article I had clipped out, but hadn’t read. Its headline was “Baby Boomers Will Need $225,000 for Medical Expenses in Retirement.” Okay, that got my attention. Healthy sized six-figure numbers will do that. But then I got to reading and then I got kinda mad. Not that I was going to need the money, but that the writers of the article didn’t do their math homework. First, that number is an average, not a mean. Remember your math? As a refresher: an average adds all the numbers and divides the sum by how many numbers were added together; a median figuratively lines up the numbers and finds the one in the middle (effectively discounting the extremes at either end). Mean numbers and averages are rarely the same. Second, while we will probably need $225,000, here’s the thing: we’re not going to need that money in a lump sum on the day we turn 65. So, if you take $225,000 and divide it by the average length of retirement, say 20 years and then further divide it by 12, you’ll find you’ll need $950 a month. Not an amount to sneeze at, but lacking the shock value of almost a quarter of a million dollars. This is my advice: Stop trying to scare us. Remember Baby Boomers are the generation that grew up with “drop drills” in case of an atomic attack, were told that marijuana would lead to heroin addition (not might, would) and that every time we had sex before marriage we would get pregnant – and gonorrhea. Instead of throwing out huge numbers like $225,000 making it seem like an impossible goal – tell me I’m going to need to budget about $1000 a month for health care costs. That doesn’t scare me. Comments (5)
WOnderfully said
written by Milliann Johnson, September 22, 2008
My dad has a blog he's putting up called Deception by Design, this would certainly fit in that catergory!!!
Engineer
written by Dana, September 22, 2008
Nancie has managed to confuse a lot of people. Please grab any basic statistics textbook and you will understand the difference between a mean (average) and a median. MEAN is not the same as a MEDIAN. MEAN is AVERAGE.
Still seems scary...
written by Caitlin, September 22, 2008
I don't know. I think there are a lot of people for whom $1000 a month is a very frightening number. I take your point about the reporting, but in the end, it still seems pretty scary to me.
...
written by Jo, September 22, 2008
Dana is right. There are 3 measures of central tendency, mean (which is the same as average); mode (the most frequent number) and median (the middle number). The mean can be unduly influenced by extremes at either the high or low end. The median is the number at which 50% of the numbers are higher and 50% are lower. They can give you very different results and make the data look quite different.
It IS Scary written by Andrea, September 22, 2008
For those of us who stayed home or worked part-time to raise our children, and didn't have high powered careers, that $1,000 figure is daunting.
I not only worked part-time, I was a nurse. Back surgery at age 52 left me totally disabled. My SSDI is $1,111/mo. after subtracting Medicare. This does not include a Medicare supplement or drug plan. I think I'll go lie down on some train tracks now.
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Nancie Clare
Nancie Clare is an editor/writer/web content producer (and card-carrying baby boomer) with more than 25 years experience writing about issues that impact everyday life. Nancie is a former managing editor of WomensWallStreet.com as well as a Daily Cents contributor and is currently consulting with a yet-to-be-launched social networking/content site for — you guessed it — baby boomers.