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June 26, 2018 at 02:18 PM
Everyone is worried about soaring health care costs, and that includes older affluent Americans, according to a new report released Tuesday by The Nationwide Retirement Institute.
Seventy-three percent of affluent older adults in the survey ranked the costs of health care as a major concern in retirement, and 64% of future retirees said they were “terrified” about what those costs could do to their retirement plans.
The Harris Poll conducted the online survey on behalf of the insurance company in February among 1,007 U.S. adults 50 or older with a household income of $150,000 or more.
Eighty-six percent of older survey respondents reported that they were enrolled in, or planned to enroll in, Medicare. At the same time, 72% said they wished they better understood what they were signing up for.
(Related: 5 Tips to Plan for Health Care Costs in Retirement)
These were among the things respondents did not know about Medicare:
- Medicare Part B is not free even for someone who has worked and paid Social Security taxes for at least 10 years: 53%
- A person cannot enroll in Medicare at just any time: 23%
- Medicare does not cost the same for everyone: 29%
- Future changes will affect the ability to sign up for Medigap/Medicare supplement plans: 62%
“With changes coming to Medicare, premiums will increase for high-income retirees, making it even more important for future retirees to understand the details and incorporate the program as part of a comprehensive retirement plan,” John Carter, president of retirement plans for Nationwide, said in a statement.
In a particularly disturbing survey result, 42% of older affluent adults with children said they would give away all their money to their children so they could be eligible for Medicaid-funded long-term care.
“Affluent adults should not be planning to rely on Medicaid,” Carter said. “Not only is the program not designed for them, they lose personal control when it comes to long-term care.”
Health Costs Haunt Retirement
Fifty-three percent of affluent older Americans in the survey said they were unsure or could not estimate what their annual health care would cost, and 65% said the same about their long-term care costs in retirement.
Respondents who did estimate expected annual health care costs put the amount at about $22,849 for themselves or for themselves and their partner, if married.
“Health care costs are the biggest expected expense in retirement and should be a major factor when estimating retirement expenses since they are often costly and unexpected,” Carter said.
“Our survey found that 39% of adults immediately associate health care with high costs. Yet, very few know what the actual costs could be, which makes planning difficult.”
