To say it’s concerning is an understatement. Only 14 percent of respondents to a new survey actually took the time to calculate the cost of health care in retirement, potentially rendering the entire planning process moot.
The findings, detailed in a new paper entitled “Playing the Long Game: Understanding How Health Care Costs Can Impact Your Retirement Readiness” from Voya Financial, underscores “the need for education around this topic,” the company (again, understatedly) says.
Previous Voya research shows that when it comes to retirement, 41 percent of Americans rank health care as the expense they are most worried about.
While it’s clear that Americans are concerned about these costs, the research found that an overwhelming 81 percent have not estimated how much they will pay for health care while in retirement.
“There is much uncertainty among consumers about the future of retirement and rising health care costs,” James Nichols, senior vice president of Voya’s Customer Solutions Group, said in a statement. “Americans need to understand the impact that healthcare costs can have on their overall financial security–both today and in retirement–and they need to be aware of the savings tools available to them to calculate their needs.”
When asked to calculate these costs, 66 percent estimated the costs would be $100,000 or less. The company notes this calculation falls far below 2017 estimates from the Employee Benefit Research Institute.
EBRI found that a 65-year-old man would need $127,000 in savings, and a 65-year-old woman would need $143,000 to give each of them a 90 percent chance of having enough savings to cover health care expenses in retirement.
Voya’s paper examines the challenges of funding health care expenses, and helps educate Americans on how they can anticipate and prepare for medical costs before and during their retirement years.
“There are many free online tools that can help, in addition to meeting with a financial advisor to discuss savings vehicles and strategies,” added Nichols. “For those who are behind on their retirement saving, it’s not too late to revisit your retirement plan and get on track to retire with confidence and security.”