Considering Health Care Costs & Life Expectancy When Planning for Retirement

Rising healthcare costs, increased longevity, family responsibilities, and two major bear markets make it difficult for seniors to plan for retirement.  Today, many people nearing retirement are considered “Baby Boomers,” or those born between the end of WWII and the introduction of oral contraceptives in 1964.   Now, seniors are living longer than ever before, as life expectancy has increased over 60% in the last century.   A major consequence of the increased longevity of elderly people today is that their loved ones are often forced to support them out of pocket when they cannot receive assistance elsewhere.

Two major bear markets and historically low interest rates, coupled with a rise in health care costs, make it difficult for retirees to secure a source of sustainable income that they cannot outlive.  In 2012, Fidelity estimated that a retired couple aged 65 would need approximately $240,000 in excess Medicare benefits to cover a lifetime of medical expenses.  Likewise, Harris Interactive estimated long-term care costs at $78,923 per year for half of all the “Baby Boomers” for over three years.  Unfortunately, many people do not realize that Medicare does not cover long-term care or assisted living costs.  These estimates are frightening.

Seniors nearing retirement in the “Baby Boomer” demographic often have responsibilities to their own parents and children, placing them in what is known as the “Sandwich Generation.”  These extra responsibilities can include paying for college, or helping support an elderly family member.   Boomers should not procrastinate in getting professional help to meet these needs, as taking action now can save them money in the long run and prevent them from having to use precious resources, such as their own retirement funds.

There are many ways to combat these frightening statistics and prevent seniors from having to spend more than necessary when the time comes to retire.  Many seniors have outdated planning documents that need to be reviewed and updated by a professional Elder Law attorney. Likewise, life insurance policies should be examined, as many were written when interest rates were higher and mortality tables were lower; beneficiary designations should be reviewed and updated as needed.  Contact W.G. Alexander & Associates today to speak to an experienced Elder Law attorney!