New research from Fidelity warns that retirement isn’t all that was once cracked up to be. In its recent Retiree Health Care Estimate, the firm claims that it will take $260,000
to cover the cost of health care after the age of 65. This is 6% higher than the same estimate last year (which was $245,000) and, more importantly, marks the highest projection since Fidelity started formulating this metric, in 2002.
What’s more, though, Fidelity says that health care costs for those of retirement age has increased by nearly 30 percent in just the last ten years.
“In recent years, the health care industry has experienced a period of historically low spending levels, due to a range of factors including a period of slow economic growth,” admits Fidelity Benefits Consulting senior vice president Adam Stavisky. “Looking forward, we expect health care spending to pick up from where it’s been in recent years, though less than what we’ve seen over the last few decades.”
Health Care for Retirees
Breaking this down, a little, Fidelity estimates it would take a 65-year-old couple (so that is two people) $130,000 on top of any savings accrued in order to cover the essential expenses for long term care like nursing home costs and the cost of other health services.
Stavisky goes on to say, “Long-term care is an increasingly important part of retirement planning, as a significant percentage of retirees will likely need some level of long term-care in retirement. Unfortunately, recent Fidelity research on family finances has shown that less than half of parents surveyed have not had detailed conversations about long-term care with their kids. Planning on how to address these potential costs will help avoid placing the burden of care on family and friends.”
On the bright side, Fidelity also goes so far as to argue that while these numbers can appear quite overwhelming, the data now presents a golden opportunity to begin another overhaul of the system.
They say that this is a great time for service providers and those who sponsor benefit plans to collaborate and create a more clear picture of better health care savings opportunities for those health care participants who are nearing retirement.
Essentially, the idea is it make a better effort for strategic planning and preparation as well as giving soon-to-be retirees the information they need to make their own decisions.