Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
Nationwide Financial announced 61 percent of pre-retirees now say they are "terrified" of what health care costs may do to their retirement plans.
In a release, the Company noted that the annual survey reveals the number of affluent pre-retirees jumped 30 percent from the fewer than half that used the word "terrified" last year to describe their concerns about paying for health care costs in retirement.
The Company said three quarters of pre-retirees say their top fear in retirement is their health care costs spinning out of control. Sixty-four percent say they have not discussed their retirement plans at all with a financial advisor. Of those who have talked with an advisor, 22 percent discussed health care costs in retirement not covered by Medicare.
"Whether it is the economy, concerns about the implementation of the Affordable Care Act or skyrocketing health care costs, our survey shows America's workers are increasingly concerned about how they will fund their health care costs in retirement," said John Carter, president and chief operating officer of Retirement Plans, Nationwide Financial. "More are realizing they can't count on someone else to fix this problem and that they will have to fund their own health care costs in retirement."
According to the survey, 26 percent do not expect to retire. That is up from 22 percent in 2012. Women are twice more likely than men to think they will never retire (36 percent vs. 18 percent). Two in five boomers also say they will delay their retirement if they had to buy their own health insurance. One in four say they will delay their retirement in order to keep their adult children on their employer-based health insurance plan.
When asked to estimate how much they anticipate spending each year on out-of-pocket health care costs in retirement, pre-retirees say on average $4,300.
Nearly two in three wish they understood Medicare coverage better, and 70 percent of those who discussed their retirement plans with a financial advisor say it is very to extremely important they discuss health care costs and Medicare coverage when planning for retirement.
Americans who plan to enroll in Medicare estimate that it will pay for 69 percent of their health care costs in retirement. When asked how they arrived at that percentage, 61 percent guess or don't know, 22 percent calculate it based on their own research, 14 percent ask friends who have already retired and 3 percent say they were told by their financial advisor.
"Boomers can't count on the Affordable Care Act or Medicare to pay their long-term care costs in retirement," said Kevin McGarry, director of the Nationwide Institute at Nationwide Financial. "The first step is to get a fact-based estimate of what those health care and long-term costs may be and work with a financial advisor to build a plan from there."
Nationwide Financial has enhanced its Personalized Health Care Assessment program and now bases its calculations on the average cost of a Silver Plan in the Affordable Care Act exchanges in their state. The program also uses proprietary health risk analysis and up- to-date actuarial cost data such as personal health and lifestyle information, health care costs, and medical coverage to provide a meaningful, personalized cost estimate that will help clients plan for medical expenses.
"It's much easier to have these difficult conversations when, instead of guessing, advisors can use a tool to provide a fact- based cost estimate based on their clients' health risk and lifestyle," McGarry said. "The assessment enables an advisor to take clients who are terrified about health care costs in retirement and turn them into someone who is confident."
The 2013 Health Care and Long-term Care Costs Study was conducted online within the U.S. by Harris Interactive on behalf of Nationwide Financial.
Nationwide Mutual Insurance Company provides insurance and financial services, including auto insurance, motorcycle, boat, homeowners, pet, life insurance, farm, commercial insurance, annuities, mortgages, mutual funds, pensions, long-term savings plans and specialty health services.
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