Fidelity Investments predicts a typical 65-year-old couple that retires this year will need about $215,000 just to cover out-of-pocket costs for acute medical care costs in retirement. That figure does not include the cost of long term care.
Researchers at the Employee Benefit Research Institute, Washington, estimate a typical affluent couple will need $295,000 to pay for lifetime access to employer-sponsored retiree health benefits, if the employer requires the couple to pay the full cost of the coverage.
But what if an advisor’s boomer client uses expensive hearing aids, or expects to have a major organ transplant, or has four grandparents who still clip their own hedges even though they are 110?
Boomer advisors have many tools they can use to predict how boomers’ investment portfolios might fare under various conditions, but they have fewer tools to predict how boomer clients’ medical expenses might vary.
Today, though, “it’s the number one area that baby boomers are concerned about,” says Ron Mastrogiovanni, president of WorldCare North America, a unit of WorldCare International Inc., Cambridge, Mass.
Many boomer advisors simply look at the Fidelity and EBRI cost averages and add a fudge factor for clients who appear to need unusually expensive care or appear to be likely to live for an unusually long time.
Getting more accurate acute medical care cost information could be helpful, retirement planners say. As of now, they explain, there are no insurance products or savings products linked to catastrophic insurance products that are aimed at prudent, affluent boomers who want to take care of post-retirement health care costs before they retire.