Money is apparently no protection from the terror that
strikes at the hearts of Baby Boomers contemplating health care costs in
retirement, according to the third annual Nationwide Retirement Institute
survey. A majority of survey respondents (72%)—all with at least $150,000 in
household assets—say one of their top fears in retirement is health care costs
going out of control. More than half (55%) believe the Affordable Care Act
(ACA) will increase those costs.
Fear isn’t doing much to inspire these pre-retirees to take
action, however. More than one-quarter of employed affluent Baby Boomers (26%)
say they believe they will never retire. More than two in five (45%) say they
would delay their retirement if they had to buy their own health insurance.
Just two years ago, most affluent Boomers surveyed expressed
little concern over health care costs in retirement. Last year, that
number rose to 30% and jumped a bit higher this year, to 44% saying they
believe it will be the biggest expense throughout retirement.
These concerns can be positive, says John Carter, president
of Nationwide’s retirement plans business. On the one hand, they increase the
conversations around health care costs in retirement, and can be a great
starting point for advisers to help retirement plan participants assess and
plan for these costs. Mr. Carter believes people just do not fully understand
the entire benefits landscape, a picture that includes Medicare, Social
Security benefits and long-term care. Nor do they fully understand how much
they will need to meet expenses in retirement.
More than three in five affluent pre-retirees (61%) say they
wish they had a better understanding of Medicare coverage. Nearly two-thirds of
affluent pre-retirees enrolled in Medicare did not know that the program does not
cover long-term care costs.
The survey did not yield many surprises, Carter says, but it
did highlight that a lack of knowledge around how to plan for the costs of
health care in retirement continues to be a challenge for pre-retirees. He
recommends using all available expense planning tools—such as Nationwide’s
Personal Health Care Assessment—and calculators that can help remove the
complexity.
As for Boomers who say they simply won’t retire, Carter
notes that many say they’ll postpone retirement or forego it altogether, but
only 3% of workers actually do that. For a range of reasons, including
unexpected health issues and changes in work situation, it is not always a
dependable plan.
According to Carter, Nationwide is seeing individuals have
more desire to learn how to create an income stream in retirement and how it
can match up against liabilities. Since health care costs are a substantial
liability, Nationwide’s goal is to move the needle.
The online survey was conducted between October 6 and
October 14 by Harris Poll, and surveyed 801 Americans age 50 or older with at
least $150,000 in household income.
Click
here to access the full article on PLANSPONSOR.com