The Scary Truth About Retirement Costs

The Scary Truth About Retirement Costs

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When you’re sitting with clients who are preparing for retirement, one of the most important considerations they face is how they can afford to have quality healthcare for the rest of their life.

Right now, we are shifting our healthcare costs from one group of people to the other. The current, younger generation was paying in more so that older people are able to afford the medical coverage they need. But what does it mean to be an “older person?” Are we talking about 50s? 60s? 80s? In this situation, we’re talking about people aged 50 to 64 – otherwise known as pre-retirees.

Why is this important? There are three main concerns regarding the healthcare of this “older” generation.

  1. Massive cost shifting is already impacting people on Medicare and Medicare Advantage plans. Medicare reimbursements have been reduced, and Medicare Supplement premiums have increased, and often this means more out-of-pocket expenses for folks in retirement, or those nearing retirement. This will lead to lower standards of living, especially if the money cannot be made up elsewhere.
  2. Doctors are leaving the Medicare system in droves, and many are no longer accepting Medicare, meaning that your retired clients may end up having fewer choices for their healthcare. Again, this is a quality of life decrease – not just financially, as their new doctors may be more expensive, but also because it could potentially mean further travel for physicians visits, or not being able to see their preferred caregiver at all.
  3. Higher premiums will be a huge challenge in the future. This means that for anyone looking to retire early, even at 60, would require substantially more money than those retiring at 65 – estimates are as high as $50,000-$150,000 for only those five years. When you get to age 65, the cost estimates are better, but not a lot. Cost shifting has so heavily impacted Medicare recipients, it may even be more difficult to find coverage at a reasonable cost.

The cost of these common retirement needs will be even higher in the future. According to Fidelity Investments, who provide an annual estimate of the cost of healthcare for retirees, the current number is nearly $250,000 per couple. Because half of Americans retire with no savings at all, this number can seem extremely depressing.

So how can retirees expect to live after retirement, and maintain their quality of life, for 10, 20, or even 30 years?

There is a spectacular opportunity to share your information and developed strategies to help combat the disconcerting numbers facing retirees today.  You can share this information, discuss options in life insurance, tax-deferred compound interest, and leverage to help your clients maximize every dollar they can.