Tuesday, November 15, 2011
Are You Planning for Rising Health Care Costs?
3:13 PM | 
Posted by
pensionfinancialservices |
If you are a Baby Boomer -- i.e. born between 1946 and 1964 – you understand a basic premise: as you age, healthcare concerns increase. We at Pension Parameters Financial Services ask that our clients who are planning retirement always consider key factors in healthcare:
If that’s not enough to drive someone planning retirement to increase his/her retirement income, what is?
Using basic life expectancy data, Fidelity’s annual Retiree Health Care Costs Estimate document that a 65-year-old couple retiring in 2011 will need more than $235,000 to cover health care costs during their retirement. Since Fidelity started the annual estimate in 2002, estimated costs have increased by 6% a year.
That cost doesn’t include long term care (LTC) expenses, which is needed by 70% or so of seniors in one form or another. The average private-pay cost of a nursing home is about $70,000 per year. Assisted living facilities average $34,000 per year. Hourly home care agency rates average are high as well.
One way that prudent Boomers are planning for this is to earmark a portion of savings for healthcare. Longterm insurance is expensive, though the earlier you purchase it, the lower your premiums. Note to those younger-than-boomer employees: You’re not off the hook. You should be allotting a portion of your income to planning ahead because you have time for it to grow. That way, however the healthcare situation evolves as you edge closer to retirement, you will have the best options available to you, thanks to a well-maintained retirement plan.
- The average lifespan is increasing due to medical inroads.
- Medical costs are rising faster than general inflation.
- Private employers are offering less coverage to retirees than in the past.
- Possible shortfalls may be on the horizon for Medicare and Medicaid coverage (stay tuned on this one).
If that’s not enough to drive someone planning retirement to increase his/her retirement income, what is?
Using basic life expectancy data, Fidelity’s annual Retiree Health Care Costs Estimate document that a 65-year-old couple retiring in 2011 will need more than $235,000 to cover health care costs during their retirement. Since Fidelity started the annual estimate in 2002, estimated costs have increased by 6% a year.
That cost doesn’t include long term care (LTC) expenses, which is needed by 70% or so of seniors in one form or another. The average private-pay cost of a nursing home is about $70,000 per year. Assisted living facilities average $34,000 per year. Hourly home care agency rates average are high as well.
One way that prudent Boomers are planning for this is to earmark a portion of savings for healthcare. Longterm insurance is expensive, though the earlier you purchase it, the lower your premiums. Note to those younger-than-boomer employees: You’re not off the hook. You should be allotting a portion of your income to planning ahead because you have time for it to grow. That way, however the healthcare situation evolves as you edge closer to retirement, you will have the best options available to you, thanks to a well-maintained retirement plan.
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