The Case of the Disappearing Nestegg: How Health Care Costs Can Annihilate Retirement Savings

Barron’s recently wrote an article on the cost of Health Care during retirement years, and the numbers they give are astounding. Today, I want to share with you some of the most surprising statistics they shared and how I think Elder Law and Estate Planning can help address some of these issues.

There is a $101,300 deficit between average healthcare costs during retirement for a couple and the average amount saved in a Fidelity 401(k) for 60-64 year-olds.

I want you to think about that number for a moment. Most people have less money saved in a 401(k) than what they would need for healthcare costs alone. Sure, you may have retirement income from other resources, but do you have enough to cover the difference? Not to mention, you probably want to use your retirement savings for something other than healthcare costs, like once-in-a-lifetime trips, your grandkids, or just the costs of living.

The average healthcare costs don’t even include the cost of long-term or nursing home care.

As I mentioned in a previous blog, it is important to consider these costs because people are becoming sicker at a younger age and are more likely than not to need nursing home care. This article even goes so far as to say that a “catastrophic long-term care cost is the single-biggest risk factor” for not having enough money to live out your golden years.

Retirement costs are only increasing.

This article does mention that the rate at which costs are increasing has slowed down since 2015, but it’s still “surpassing GDP growth.” Although they also say that it’s difficult to predict costs even ten years down the line, the fact that healthcare costs are nonetheless increasing is not promising for someone who hasn’t even reached retirement age.

So how can Elder Law and Estate Planning help me out? 

If you’ve already reached retirement age and are concerned about how you’re going to pay for long-term care costs, or you have a spouse or parent who needs nursing home care and you’re worried about how you’re going to pay for it, an Elder Law attorney can either help with Nursing Home Pre-Planning or Medicaid Qualification. You or a loved one may be a candidate for Nursing Home Pre-Planning if you think you may need to enter a nursing home after five years. In this case, we would prepare your assets for eventual Medicaid qualification, where you can get help paying for Nursing Home care from government benefits. Otherwise, if your loved one is ready to go into a Nursing Home now, we can work to prepare assets for Medicaid now.

If you’re farther away from needing a nursing home, you may want to consider adding Asset Protection Planning to an Estate Plan. That way, if something devastating happens—like a car accident or high medical bills—your life savings are unaffected.

Something else you may consider outside of legal planning is looking at getting long-term care insurance. Like I’ve mentioned before, long term care isn’t a blanket solution for everyone, but if it is right for you it can help mitigate some of those long-term care issues.

If you would like to talk about Nursing Home Pre-Planning, Medicaid qualification, long term care insurance, and want to start considering long-term care planning, give us a call at 214-292-4225 to set up an appointment today.

Written by Miller Law Office

Miller Law Office

The Miller Law Office is here to help you build and protect your legacy. Rather than having a traditional estate planning practice, which is focused on transactions (such as the drawing up of wills and other documents), we have a more relational focus – having on-going contact with clients over the long-term, helping clients to protect themselves and their families.