Sept. 11, 2016 — This is the final post in a four-part series exploring how baby boomers, Gen X and millennials are preparing for healthcare costs in retirement. Here we recap the challenges facing these groups.
Who doesn’t want a life of leisure upon retiring? It’s the end goal to our working years, being able to enjoy the fruits of our labor. But planning for this period is critical to determining a life of simplicity or sacrifice.
America’s retirement system is rapidly changing, so much so that the retirements of the various generations will be radically different – not only from their parents’ generations, but also from each other. A report by the Transamerica Center for Retirement Studies shows that across the three groups, “four out of five workers agree that their generation will have a much harder time achieving financial security compared to their parents’ generation.” And many have the expectation of working in retirement, whether transitioning from full to part time or within a different capacity.
Even with Medicare, healthcare costs can be staggering. As each generation determines an approach for retirement savings, accounting for healthcare expenses should be a cornerstone of the plan.
Baby boomers: Understand that Medicare isn’t blanket coverage for medical expenses at age 65. Focus on long-term needs and commit to saving now to make up for limited financial resources, perhaps with insurance products or investments.
Generation X: While focusing on health and wellness is good, understanding how to pay for it long term is the bigger priority. Uncertainty is not a rationalization for unpreparedness. Gen X can explore HSAs, long-term policies and various Medicare plans.
Millennials: Get a realistic understanding of what retirement costs and how health care should factor into savings needs. With longer life expectancies and the future of Medicare and Social Security in a state of uncertainty, millennials must find strategies other than working longer to help offset medical expenses and long-term care.
There is no surefire number of what health care will cost throughout retirement. But education and proper planning now can help prevent your nest egg from disappearing before you can enjoy it.