Health costs in US loom large for retirees
Wednesday, 20 February 2008
NEW YORK, Feb 19 (AP): Many baby boomers are not going to be able to maintain their standard of living in retirement, not only because they're not saving enough but also because they face skyrocketing healthcare costs.
A study being released Tuesday by the Centre for Retirement Research at Boston College found that health care expenses could take a big bite out of retirees' budgets.
The government currently estimates an individual's costs for medicare premiums, co-payments and other cost-sharing at about $3,800 a year for a single person and $7,600 for a couple. Add to that $500 per person for dental care, eye glasses, hearing aids and other items not covered by medicare.
To cover such costs in the decades most baby boomers and Generation Xers will live after quitting their jobs, an individual needs to go into retirement with some $102,000 earmarked just for healthcare coverage, the centre estimated. A couple needs about $206,000.
Baby boomers come from the generation born between 1946 and 1964; Gen Xers were born between 1965 and 1974.
The centre worries that most Americans have savings far below the level needed for health and non-health expenses. In fact, the median retirement savings balance for households approaching retirement is just $60,000, it said.
Before health care costs are factored in, the centre estimates that some 44 per cent of baby boomers and Gen Xers are "at risk" of being unable to maintain their standard of living in retirement. Add in the health care costs, and that rises to 61 per cent being at risk for a lower standard of living.
Alicia Munnell, director of the centre, said the numbers were "shockingly large." At the same time, she added, there are steps people can take to reduce the odds of an unpleasant retirement.
"The most effective step is to plan on working a few years longer," Munnell said. "That cuts the per cent at risk by about 10 percentage points."
People also can step up their savings. And, she added, they can watch their weight and exercise more.
"Good health habits matters when it comes to holding down health care costs," she said.
A study being released Tuesday by the Centre for Retirement Research at Boston College found that health care expenses could take a big bite out of retirees' budgets.
The government currently estimates an individual's costs for medicare premiums, co-payments and other cost-sharing at about $3,800 a year for a single person and $7,600 for a couple. Add to that $500 per person for dental care, eye glasses, hearing aids and other items not covered by medicare.
To cover such costs in the decades most baby boomers and Generation Xers will live after quitting their jobs, an individual needs to go into retirement with some $102,000 earmarked just for healthcare coverage, the centre estimated. A couple needs about $206,000.
Baby boomers come from the generation born between 1946 and 1964; Gen Xers were born between 1965 and 1974.
The centre worries that most Americans have savings far below the level needed for health and non-health expenses. In fact, the median retirement savings balance for households approaching retirement is just $60,000, it said.
Before health care costs are factored in, the centre estimates that some 44 per cent of baby boomers and Gen Xers are "at risk" of being unable to maintain their standard of living in retirement. Add in the health care costs, and that rises to 61 per cent being at risk for a lower standard of living.
Alicia Munnell, director of the centre, said the numbers were "shockingly large." At the same time, she added, there are steps people can take to reduce the odds of an unpleasant retirement.
"The most effective step is to plan on working a few years longer," Munnell said. "That cuts the per cent at risk by about 10 percentage points."
People also can step up their savings. And, she added, they can watch their weight and exercise more.
"Good health habits matters when it comes to holding down health care costs," she said.