More than half of working Americans over age 50 (55%) don’t think they’ll have enough money to pay for health care in retirement, according to a survey by AARP. While Medicare covers only about half of health care costs for the average recipient, four in ten (38%) say they haven’t saved anything at all for health-related expenses. This is despite the fact that multiple studies show that these costs often reach more than $200,000 for a retired couple.
Among workers in this age group, more than half (57%) say they plan to work past the age of 65, AARP found. Although 68% believe they should begin saving at age 35 or younger, just 28% began saving at that age. AARP’s free online Health Care Costs Calculator, part of its “Ready for Retirement” suite of planning tools, could help individuals plan for health savings.
The survey shows that Americans haven’t planned enough for health expenses in retirement, according to Debbie Banda, vice president for financial security at AARP. “Even though these costs can have a significant impact on retirement savings, families and individuals often struggle to save what they need because they are paying other necessary expenses or helping to support other family members or loved ones,” Banda says.
Facing future health costs can make many people feel either overwhelmed or overconfident, Banda notes. “Thinking that your health care will be paid for by Medicare alone or avoiding health care planning altogether are not the right solutions,” she says.
The data behind the survey report, “Planning for Health Care Costs in Retirement: A 2014 survey of 50+ Workers,” was gathered by the independent research company Woelfel Research via telephone from June 4 to June 22. A national sample of 1,002 non-retirees participated.
The survey can be downloaded from AARP’s website.