Many ‘Terrified’ Over What Health-Care Costs May Do to Their Nest Eggs
What is one of the biggest fears gripping today’s retirees? Paying for health care in retirement. According to an annual survey conducted by Nationwide, 63 percent of affluent pre-retirees are "terrified" over what health-care costs will do to their plans for retirement.
"Americans are living longer and need to adequately prepare to cover health-care costs and other expenses for those years. Not discussing these issues does not mean they won't happen," says John Carter, president of Nationwide's retirement plans business.
The question, of course, is how much do you need to save?
As a general rule of thumb, Fidelity Investments advises couples to estimate they'll need $245,000 over the course of their retirement to pay for medical expenses not covered by Medicare. The estimated costs are calculated per couple, because it is generally one half of the couple who consumes most of the expense.
"Investors need to ensure they're able -- at a minimum – to cover essential expenses in retirement by factoring in the amount they're expected to receive from reliable streams of income, such as from Social Security, pensions and annuities, along with savings," says John Sweeney, executive vice president of retirement and investing strategies at Fidelity.
And, that's where the holidays come in. Many of us travel long distances to see family over the holidays. And, given that you might not get together that often, now is a good time to talk about topics that may go otherwise unaddressed. Experts advise families to set aside time to have an honest conversation about retirement and health-care savings.
Doug Flynn, a Long Island certified financial planner and cofounder at FlynnZito, says, "We believe that family discussions are very important. Most children want nothing more than for their parents to have a good retirement, but without them knowing the details of your situation they will not fully understand the predicament some parents may get themselves into as they age."
Wait until after the presents are exchanged and the table is cleared, as the week of New Year’s is a good time to communicate with parents about their financial situation and plans.