Are you Prepared for Rising Health Care Costs in Retirement?

A new report released recently from Ameriprise showed that over 50% of baby boomers are seriously concerned about their health care costs, and the affordability of said costs, during retirement.

Unfortunately, the same report also shows that only 1 in 5 people who are nearing retirement have actually taken any steps financially to prepare for rising health costs once they reach their “golden years”.

The report did however say that, even though many baby boomers are not making any moves to prepare for these increased retirement health care costs, they are doing something positive; taking steps to increase their physical activity and get their health in order before they quit working for good.

In the report it shows that, of all the retirees and pre-retirees surveyed, over 60% of them had done something to get healthier, including starting a diet and also beginning to exercise more, with the ultimate aim of keeping their health care costs down once they retire.

The report also shows that over 75% of the respondents said that, when it comes to their personal health during retirement, they are more than a little concerned. In fact, the cost of healthcare during retirement, no matter what income or wealth level the respondent had, still remained a top concern for baby boomers according to Pat O’Connell, the Executive Vice President of Ameriprise.

The typical costs for healthcare during retirement

Interestingly enough, baby boomers that were surveyed estimated that they would need $232,000 during retirement to cover their health care costs and the costs for their spouse as well. This is interesting only because it’s actually a fairly accurate cost estimate, and 90% of the people who had saved $255,000 would have enough to cover their health care costs once retired, down from $287,000 in 2011 according to information from the Employee Benefit Research Council.

Another interesting fact is that most baby boomers put their health at the top of the list of most important factors for a happy retirement, over things like financial security and being surrounded by family and friends. That’s according to a separate survey by Age Wave and Merrill Lynch which was released in September of this year.

The solution of course is to save as much money as possible while working in order to cover these increased health care costs during retirement, but it’s obviously much easier said than done. The second solution is simply to make sure that you have excellent health insurance as well as long-term care insurance so that, if you ever need it, it will be available.