How daunting is the prospect of health care costs in retirement? Even affluent Americans are terrified,” according to a new poll. Three-quarters said that out of control health care costs is among their top retirement fear.
The survey was conducted by Harris Interactive, of 1,250 Americans with a least $250,000 in household assets—including 625 who plan to retire within 10 years.
Health care costs and retirement are the two primary concerns of households with a net worth between $500,000 and $1 million (not including primary residence), according to a first quarter wealth level study conducted by Millionaire Corner. Sixty-seven percent of respondents said they are worried about having enough money ser aside for their senior years, up from 63 percent in 2011.
Baby boomers especially are increasingly worried not only about be able to take responsibility of their own aging parents (57 percent vs. 53 percent last year), but of someone to care for them in their old age (53 percent vs. 50 percent).
But despite this, the Nationwide survey found, 38 percent of those nearing retirement said they have not discussed their retirement at all with a financial advisor. Of those who have, one in five have discussed health care costs in retirement not covered by Medicare.
“Americans—even those who have diligently saved for their golden years—are not prepared for the reality of health care costs in retirement and don’t understand how Medicare works,” said Nationwide Financial Distributors Inc. President John Carter. “Too many assume their employers will continue to pay their premiums during retirement or Medicare will cover all health care costs.”
Only one in five surveyed said they were confident in their knowledge of Medicare coverage, and more than half said it is extremely important they educate themselves when planning for retirement. For example, soon-to-be retired Americans who plan to enroll in Medicare estimated that Medicare will pay for 68 percent of their health care costs in retirement. When asked how they came up with this percentage, nearly three in four said they had guessed or didn’t know.
Though 58 percent of soon-to-be-retirees said they believe their financial advisor is not equipped to discuss their retirement health care costs, two-thirds of those who have had this discussion with their advisor said they were helpful or very helpful in estimating their health care costs in retirement.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.