Merrill Lynch survey – top retirement concern is health care costs

According to a recent survey conducted by Merrill Lynch it would appear that, for people 50 years old and older, the major concern in retirement was the overall cost associated to health care.

The article, by Nanci Hellmich, titled “Top retirement financial concern: Health-care bills” that was published by USA Today and carried by CNBC,  reported that “it’s no wonder people are worried. Another report estimated that out-of-pocket health-care costs in retirement may equal $318,800 if retirement lasts 30 years; $220,600 for 25 years; $146,400 for 20 years; $91,200 for 15 years; $50,900, 10 years”.

The problem with these guesstimates is that health care costs, unfortunately, won’t be this low. Due to the health care inflation expected to be roughly 6.2% according to the Centers of Medicare Services (CMS) and the current costs for coverage for a couple wanting to have their health expenses as fully covered as possible is about $8,140 this year.

Just by basic math those who plan for 30 years should really expect to incur a cost of more than $650,000 for 30 years: $460,000 for 25 years: $306,000 for 20 years: $192,000 for 15 years: $108,000 for 10 years.

Now keep in mind that this is for a couple retiring today and living to those years. For those that are younger the costs may be even higher and the bigger problem this article neglects to mention is the fact that health care costs are also means tested. Meaning that in retirement Medicare will assess a surcharge on those that are earning too much income.

The current surcharges start at 40% more in certain costs and range as high as 220%. But, even these surcharges, along with the income limits, are slated to be changed in either 2016 or 2017 to be even higher – the range could be as high as 60% to 360% with the income brackets projected to be lowered by 11% for individuals and to 47% for couples.

With, according to the survey, less than 15% of those polled even planning for any costs associated to health care in retirement the ramifications for those who have not addressed this mandatory cost, most likely, will be a lot more than they ever dreamed of.

Thankfully there are a couple of firms addressing this expense.

Recently, Money Guide Pro, one the country’s leading financial planning software tools created a partnership with Jester Financial Technologies in order to provide the ability for the financial firms it works with to properly plan for these costs.

To see a list of the financial firms that may have access to this information through Money Guide Pro please click here.

For those that would like to have the opportunity to calculate what their health costs may be in retirement there is, also, a free calculator, provide by Jester Financial Technologies at www.yourretirementcosts.org.

Health care costs just happen to be the elephant in the room when it comes to retirement and with proper financial planning along with the correct implementation of financial products like Roth Investments, specific Annuities and certain Life Insurance policies they can be controlled and managed.

The question that remains though, is your financial professional or even your Employer Retirement Plan administrator going to start the conversation?

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