Plan to afford health care in retirement
DULLES, Va. (5/22/12)--The cat's out of the bag: Americans can't afford to retire. In fact, only half of us are saving anything at all for retirement. At the same time, our healthcare costs in retirement have increased an average of 6% a year in the past decade (Huffington Post May 10).
People in two demographic segments are least likely to be putting money aside: the young and the poor. In 2011, only 44% of young adults ages 18 to 34 saved any amount of money for retirement, and only 23% of Americans earning less than $50,000 a year saved at least $2,500 in their retirement accounts.
In a recent study, Fidelity Investments estimates that over an average retirement lifetime of 20 years, a 65-year-old couple can expect to pay $240,000 for medical costs not covered by Medicare. This estimated amount includes Medicare premiums, out-of-pocket costs for prescription drugs, Medicare supplemental insurance, and expenses like co-pays, co-insurance, and deductibles.
You don't need to have the individual's portion of that $240,000 in your 401(k) the day you retire. The estimated costs are spread over your remaining lifetime. But you won't be able to pay for your medical expenses without a plan.
Take these steps to make sure you can pay for your health care costs in retirement:
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