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Plan for Your Retirement Health Care Costs Today

By Daniel @ LivingSenior - May 7, 2011

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A brand new survey sponsored by Sun Life Financial has uncovered some potentially alarming statistics when it comes to folks and their retirement planes. According to this study, around 92% of workers said "they don't know how much their health care will cost in retirement or vastly underestimate the amount." Of that group, around 40% have absolutely "no idea" what these costs will be. Just 8% came close by guessing $200,000 or more would be needed. The majority estimated a figure just below that number.

Here's the harsh reality: For a 65-year-old couple who plans on retiring this year they will need approximately $230,000, to cover medical expenses in retirement. These figures are according to a Fidelity Investments study that was released in March. Keep in mind that number is just for medical costs; it doesn't include money for dental problems, long-term care or any potential nursing home expenses.

Because these same workers don't know what to expect, they are having a hard time deciding on the best approach towards a retirement savings plan. The Sun Life survey goes on to show that 74% of workers "lack specific plans to cover retirement health care costs." This includes a group of folks between the ages of 60 to 66 who are very near to retiring themselves. Right now, only 30% of workers between age 50 and 59 are making any significant retirement plans. The survey was conducted among 1,500 workers in March.

"People are overwhelmed," says Janet Whitehouse, general manager for Sun Life Financial's individual life insurance division. She also says, The ongoing shift of responsibility for workers to provide for themselves in retirement, rather than their employers, has caused some workers to freeze for fear of making a mistake.

In order to avoid these pitfalls, here are some simple tips you can begin following today to help develop a thorough retirement plan.

  1. Get the Facts: As you grow older, you'll become aware of all the resources provided by AARP. Among these is a retirement calculator program that is set up to help you estimate all your retirement costs. Once you know this number, you can begin to plan accordingly.

  2. Get Disability Insurance. The Sun Life survey shows that 9% of workers have begun to dip into their retirement savings or borrowed money to pay off medical bills. Most of those don't think they will ever be able to replace those funds. This drives home the need for purchasing a decent disability insurance. By decent, it means a policy that can cover part of your salary in case you are unable to work because of an injury or sickness. If you think you already are covered through your work, make sure you review the policy and understand all the details.

  3. Get Long-term Care Insurance. The U.S. Department of Health and Human Services has found that up to 70% of seniors over the age 65 could end up needing some form of long-term care. This could be in assisted living facility or nursing home. A long-term care insurance policy can help defray these kinds of costs. As with any insurance, the ultimate goal is to never need it, but to have it just in case.

  4. Get Healthy. Just like you should be planning your financial security starting today you should also be planning your wellness security. This could mean a change in diet, the addition of more exercise and routine physicals. If you're in your 50s and still smoking, what are you waiting for to quit? If you're overweight, what are you waiting for to lose the pounds? Many future health concerns can be prevented by adopting a healthier lifestyle.