Historically financial services has not included health care in financial planning, and it is one of the largest expenses people will face — especially healthy retirees, according to recent research.
The Insured Retirement Institute (IRI) released a report that finds healthy retirees pay more in health care costs than their less healthy counterparts.
The healthiest people will have a higher probability of running out of assets and spending their Social Security on health care costs, according to a report from HealthView Services, a business that makes projections on future health care expenses primarily for the financial services industry.
The HealthView researchers found a retirement income approach using either single premium immediate annuities or a deferred income annuity in combination with systematic withdrawals will provide a healthy individual with a larger portfolio balance at life expectancy age, according to a statement.
So why should advisors worry about saving for health care during retirement? Because it’s the number one expense that people face when they retire, according to Ron Mastrogiovanni, the CEO and founder of HealthView Services. “If we’re going to help people plan for retirement, ignoring health care is a very serious mistake,” he tells ThinkAdvisor.
This was a sentiment shared by a panel of experts at the 2014 IRI Vision conference in Williamsburg, Virginia. Steve Saltzman, principal of Saltzman Associates, said in the panel discussion that health care costs are one of the biggest concerns for baby boomers. “It’s a significant cost in financial planning and there is a significant trend from the demographic perspective,” said Saltzman.
For the next 19 years, 10,000 people per day will turn 65, and this growing age group will change the costs spent on health care in America.