Retired Americans advise to pay attention to your health — or it’ll cost you.
We save to vacation our golden years away. But the rising costs of healthcare are cramping those plans.
Retired Americans are confident they’ve saved for all they need to last the rest of their lives, according to a study from insurance company MassMutual. There’s one exception, though — healthcare. The unpredictability makes it their biggest financial concern.
“While we’re working, many of us think about retirement in terms of our leisure pursuits, a kind of permanent vacation that requires more disposable income,” says MassMutual executive Tom Foster Jr. “Retirees’ experience tells us that health concerns become increasingly prominent, especially as many retirees begin experiencing health issues and their subsequent costs.”
Worried about having enough
Healthcare is one of the largest of retirement savings. It’s estimated to cost $250,000 on average to fund healthcare throughout a full retirement, according to Fidelity Investments. And the average 65-year-old couple could pay almost $490,000 in total health-related costs throughout retirement, according to MassMutual. It’s no wonder why so many Americans fret having the funds to support their full retirement.
The costs have caused retired Americans who saved their whole life to worry about using money from their nest egg, says a study from Ameriprise Financial. Only 21 percent are confident about taking from their assets. In fact, 68 percent have not begun to withdraw their money aside from taking required minimum distributions.
“After working, saving, investing and making sacrifices for decades to build a nest egg, transitioning to spending can be challenging,” says Ameriprise Financial VP Marcy Keckler. “Retirement requires individuals to think differently about money. Having a plan in place to manage their finances can help retirees feel confident about spending their assets and address the fears that may be holding them back.”
How much retirement savings is enough?
It’s typically recommended to have $1 million to $1.5 million socked away. Or the equivalence of 10 to 12 times the amount of your current income, according to AARP. Most respondents to Ameriprise’s study only have a fraction of that saved.
The typical amount saved was $839,000. Of course, the above figure from AARP is a recommended amount and isn’t a hard and fast rule. Nevertheless, a quarter of them say they’re not sure whether their money will last throughout their lifetime.
On top of their feeling of uncertainty is a savings gap between what some retirees thought they would need versus what they actually have saved. One in four retirees fell short of their savings goal by at least $250,000.
How do most plan to support their retirement?
Savings and investments. Managing investment risks and returns are the No. 1 action retirees are taking to make their money last. But 59 percent think it’s complex.
To learn they’re doing research. Then, of course, many others are seeking professional financial advice as well. Aside from that, most say pensions (72 percent) and Social Security (71 percent) are important to their retirement income. Here’s how many are and aren’t receiving Social Security…
- Have started receiving Social Security: 76 percent
- Started claiming benefits between ages 62 to 64: 49 percent
- Plan to receive benefits between ages 62 to 64: 20 percent
- Plan to receive it at age 70 or older: 21 percent
- Haven’t started and don’t know when they will claim it: 34 percent
“While many retirees can manage their expenses to lower income levels in retirement, the rising cost of care may steadily reduce their lifestyles as they age,” Foster says. “Once you’re older, it may be impossible to make up for any increasing income needs by simply tightening your belt. It’s far better to err on the side of having more rather than less income than you anticipate needing, especially as costs for care continue to escalate.”
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Article last modified on September 13, 2018 Published by Debt.com, LLC . Mobile users may also access the AMP Version: Healthcare Costs Scare Retirees Away From Touching Their Savings - AMP.