Talking about health care can be uncomfortable for financial advisors and their clients. But having this very important conversation may help reduce the stress for clients, especially those nearing retirement. A recent Nationwide Retirement Institute survey highlighted concerns about health care costs and the reasons for not discussing those concerns, as well as client gaps in understanding and miscalculations about health care costs in retirement.
3 out of 4 future retirees are somewhat or very concerned about health care costs. As they think about their own retirement planning, 63% of future retirees are most stressed about paying for health care, and 62% are most stressed about an unanticipated decline in health. 79% cite health care costs as their top financial concern in retirement.
Yet only 45% plan to discuss health care costs with a financial advisor! When asked why they haden’t discussed health care planning with an advisor, the most common responses were that they preferred to discuss it with a spouse (21%) or that it is a personal issue (19%). However, 15% said they don’t know enough about the topic, and 13% think financial advisors don’t know enough about the topic.
When it comes to their own lack of understanding, future retirees may be right. 79% of future retirees incorrectly think Medicare Part B is free after working and paying taxes for at least 10 years. 86% incorrectly think Medicare covers long-term care. 36% of future retirees estimated between $1,000 and $5,000 for their annual health care costs, but another survey found that the actual average annual health care cost is $10,739.
So take the time to educate yourself more about health care costs in retirement, HSAs, Medicare, and long-term care. Although it’s a difficult topic, be the first one to bring up health care costs in retirement, in addition to other, more common retirement goals. (Hint: Horsesmouth’s Savvy Medicare Planning program can help.)