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FORT WORTH, Texas(BUSINESS WIRE)
Amid growing protests from opponents of health care reform, the majority
of middle-class Americans are expressing concern about paying for
medical costs during retirement and dramatically underestimating the
financial burden theyll be expected to bear.
The July survey of the First Command Financial Behaviors Index? reveals
that 72 percent of Americans are at least somewhat concerned about
health care costs in retirement, with those closest to retirement
expressing the most concern. Respondents predict that they will need
about $33,000 above traditional retirement savings to cover health care
costs during retirement. While significant, this estimate is only a
fraction of the $166,000 in out-of-pocket expenses estimated for someone
retiring today and living to age 100.
As difficult as it is to say, Americans have every reason to be
concerned about health care costs in retirement,? said Scott Spiker, CEO
of First Command Financial Services, Inc. As government programs
including Social Security and Medicare become increasingly stretched
to keep up with the growing population, retired Americans should be
prepared to bear more of the financial burden. That's why it's important
to take health care expenses into account now as you plan for your
retirement.?
While Medicare covers many medical costs for retirees, it does not cover
all financial needs. Current premiums for Medicare Part B, the average
for Medicare Part D and the maximum out-of-pocket drug costs before
Medicare Part D begins paying 95 percent of drug costs total $5,842 per
year. Assuming a five percent return on savings and an average premium
increase of 3.7 percent (the Part B increase rate through 2016), an
individual retiring at age 65 today and living to age 100 would need an
estimated $166,000 to meet these expenses. For a couple, the figure
doubles to $332,000.
Despite the fact that many Americans are concerned about the increasing
costs of health care and their ability to pay for those costs in
retirement, less than one-third of respondents include health care costs
as part of their retirement planning. Among those, half save less than
$100, 36 percent save between $100 and $300, and 14 percent save more
than $300.
Among non-retired Americans with a written financial plan from a
financial advisor, 41 percent include health care costs as part of their
retirement planning, nearly double the percentage of those without a
financial plan.
Whether retirement is five years away or 50 years away, Americans must
take into account the costs associated with health care during
retirement,? Spiker said. Medicare and Social Security deficits,
combined with higher health care costs and longer retirements, are
poised to create a perfect storm. Ignoring the problem wont make it go
away, and Americans shouldnt rely on government to solve these issues.
Financial advisors have the tools and expertise to help consumers
determine how much to set aside to cover medical expenses and prepare
now for the standard of living they desire in their retirement years.?
About the First Command Financial Behaviors Index?
Compiled by Sentient Decision Science, LLC, the First Command Financial
Behaviors Index? assesses trends among the American public's financial
behaviors, attitudes and intentions through a monthly survey of
approximately 1,000 U.S. consumers aged 25 to 70 with annual household
incomes of at least $50,000. Results are reported quarterly. The margin
of error is +/- 3.1 percent with a 95 percent level of confidence. www.firstcommand.com/research
About Sentient Decision Science, LLC
Sentient Decision Science was commissioned by First Command to compile
the Financial Behaviors Index?. Sentient is a full-service market
research firm with special vertical expertise within the financial
services industry. Sentient specializes in advanced research design and
statistical analysis of behavioral and attitudinal data.
About First Command
First Command Financial Services and its subsidiaries, including First
Command Bank and First Command Financial Planning, assist American
families in their efforts to build wealth, reduce debt and pursue their
lifetime financial goals and dreamsfocusing on consumer behavior as the
first and most powerful determinant of results. Through personalized
financial plans that emphasize accumulating wealth while reducing risk,
First Command Financial Advisors have established lasting relationships
with hundreds of thousands of client families since 1958.
First Command Financial Services, Inc. is the parent company of
First Command Financial Planning, Inc. (Member SIPC, FINRA) and First
Command Bank (Member FDIC). Financial planning services and investment
products, including securities products are offered by First Command
Financial Planning, Inc. Insurance products and services are offered
by First Command Financial Services, Inc. Banking products and
services are offered by First Command Bank. Securities products are not
FDIC insured, have no bank guarantee and may lose value. In
certain states, First Command Financial Services, Inc. is a separately
registered domestic corporation and does business in California as
First Command Insurance Services.? A financial plan, by itself, cannot
assure that retirement or other financial goals will be met.
First Command Financial Services
Mark Leach, 817-569-2419
Media
Relations
msleach@firstcommand.com
www.firstcommand.com
Source: First Command Financial Services
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