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The High Cost of Living
Some experts estimate that the average employee needs to save $1 million for retirement. But how much should an employee save for health care expenses during retirement?
Many retirees falsely assume that Medicare will cover everything, but that's usually not the case. HealthView Services, a provider of health-care cost projection software, asserts that a healthy 65-year-old couple retiring in 2019 will need almost $390,000 to cover health-care expenses. This amount includes the costs of:
- Premiums for Medicare Parts B and D
- Dental insurance, which is not covered by Medicare
- Out-of-pocket costs for doctor's exams, hearing services and more.
Employees who are banking on staying healthy might be surprised to learn that living longer can increase the amount of money needed for health care costs. The $390,000 estimate above does not include long-term care expenses such as skilled nursing care and rehabilitative services. Average assisted living stays can run $48,000 annually, according to Genworth Financial.
To combat this, encourage your employees to start saving now or fund a health savings account, if you offer one, because they will be able to withdraw from it during retirement.
Another option is for employees to purchase long-term care insurance which reimburses policyholders for services including bathing, dressing or eating.
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