Not having enough money for retirement is a top concern shared by 64% of Americans in a recent Gallup poll, and the number is growing. Six-in-ten people worry about unexpected medical costs, and more than half worry about their ability to maintain their standard of living. No group feels these worries more acutely than retirees or people nearing retirement.
The high cost of healthcare and the significant cost of serious illness or dementia is climbing at one of the most rapid rates in years. Last year TSCL’s annual Senior Survey found that 29% of survey respondents spent up to one-half of their Social Security benefits on healthcare costs, up from 25% the previous year. Another 18% spent more than one-half of their benefits on healthcare, up from 13% the previous year.
Retirees are rightfully anxious about financing healthcare in retirement. Some retirement experts estimate that a 65 - year - old couple who retired in 2016 would need $260,000 for medical expenses throughout retirement and $400,000 if you include the costs of long-term care.
The problem is that most retired individuals don’t have $260,000 to set aside just for healthcare. According to the Employees Benefit Research Institute, the average person in their 60s who has contributed to a 401(k) for more than 30 years only has about $275,000 for all retirement expenses. But that’s just counting the people who do have retirement accounts — and millions do not. According to the U.S. Government Accountability Office, 60% of all U.S. households have no retirement savings at all.
TSCL is working to develop legislation that would ensure greater retirement security for older Americans by providing a modest boost in benefits. TSCL believes that a boost can be provided if Congress would raise the taxable maximum earnings that are subject to Social Security taxes — requiring all workers to pay their fair share.
Source: “Americans’ Financial Worries Edge Up In 2016,” Gallup, April 2016. “You Might Need Nearly $350,000 To Pay Health-Care Costs In Retirement,” Robert Powell, Market Watch, February 6, 2017.