How to put retirement healthcare costs on employees’ radar
Employers need to help their workers understand and prepare for additional medical charges when they stop working.
When people sit down to figure out how much they need to save for retirement, many times they don’t take healthcare expenses into account. That could be because they believe government programs will step in and cover all of their expenses or just that the idea hasn’t crossed their minds, says Adam Stavisky, senior vice president, Fidelity Benefits Consulting.
Fidelity takes a look at retirement healthcare expenses each year to determine how much the average 65-year-old couple will spend on healthcare expenses in retirement. The 2017 estimate of $275,000 is a 6% increase over last year’s estimate of $260,000.
The data means that both employees and employers must work to prepare for healthcare needs during post-work years.
“With ongoing uncertainty across the healthcare landscape, it’s more important than ever for individuals to educate themselves on steps they can take to prepare for their healthcare needs in retirement,” Stavisky says. “These expenses are only expected to increase in the future, so it’s critical that people include healthcare as a significant part of their retirement plan.”
Stavisky points out that most people probably assume Medicare pays for everything in retirement, but “by design it doesn’t cover everything.”
Employers can help by taking a more active role in helping employees manage their health and wellbeing during their pre-retiree years and providing benefits that can contribute to improved health and potentially lower healthcare costs in retirement.
Many companies, too, are encouraging employees to save for retirement medical expenses through a health savings account.