Healthcare Costs: A Growing Concern for Those Approaching Retirement
As millions of ‘boomers’ head towards retirement, saving money and paying down debt are obvious concerns, but what's interesting is how their concern about the cost of healthcare in retirement.
According to a Nationwide Retirement Institute survey, "even if a client doesn't bring up the subject of health care costs with their advisor, they are probably worried about it." and "nearly half of future retirees surveyed can't or won't estimate how much their health care costs will be in retirement. But among those who did the estimate, their guesses fell short of reality."
Financial health and healthcare should be viewed together, and not surprisingly, the study found. “Financial matters are making people sick, and the king of all financial worries over a lifetime is health care,” says Nationwide in a press release. Unfortunately, the importance of this topic doesn't translate into action often enough as the study indicated "that a majority also are not having informed discussions with professionals on how to prepare. Just slightly more than 30% of older adults plan on discussing health care costs during retirement or long-term care costs with a financial advisor or consultant."
The Reality of Healthcare in Retirement
It's easy to understand the results of this survey and advisors should consider ways to better address the challenges their boomer clients may face and how those "concerns" may translate into significant financial obligations.
There's no reason to question the accuracy of the survey, so if "67% of Future Retirees wish they understood Medicare coverage better" then the financial advisory community has work to do. Especially when clients look at the bigger picture and accept that there is an unbreakable link in our country between retirement & healthcare. There are now 44 million Americans currently on Medicare and simply acknowledging basic demographic trends should indicate Medicare will likely struggle to maintain its current benefit and premium structure.
This leads to a final point for consideration: For those with even a mild concern about Long-Term Care, they likely fall into a category of people that includes 86% of those surveyed who incorrectly think Medicare covers Long-Term Care - These are YOUR clients and they need or want to discuss planning options.