Bridging the retiree healthcare gap
Healthcare is one of the largest expenses retirees may face as they get older, and it can have a significant impact on their savings.
EMPLOYEE CHALLENGES
Things add up as employees countdownto retirement
Staying healthy in retirement won’t necessarily save money. Longevity is also a driver of total retiree healthcare costs.
An average couple, age 65, currently needs more than $273,000* to cover their healthcare costs in retirement (does not include the cost of long-term care)
Healthcare costs are projected to increase 6-7% annually**
Living two extra years will cost today’s 55-year-olds $73,000**
DEEPER DIVE: Download the Employee Benefit Research Institute
about health expenses in retirement.
EMPLOYEE CHALLENGES
Ignoring retiree health creates unintended consequences for employees
A majority of Americans (60 percent) are concerned about how they will pay for healthcare expenses in retirement.
HOW IGNORING RETIREE HEALTHCAN IMPACT EMPLOYEES
LEAVE EMPLOYEES UNPREPARED FOR RETIREMENT
Without retiree healthcare, many employees remain locked in their jobs to maintain active health coverage.
ERODE RETIREMENT INCOME
Retirees who utilize retirement plan assets for medical expenses could see an erosion of their savings not planned for or expected.
RISK HEALTH & FINANCIAL WELL-BEING
If employees bear the full burden of saving for retiree health expenses, they may ignore the issue altogether.
EMPLOYER CHALLENGES
Ignoring retiree health creates unintended consequences for employers
Neglecting to connect health and financial well-being diminishes retirement readiness for employees.
HOW IGNORING RETIREE HEALTHCAN IMPACT EMPLOYERS
STALL WORKFORCE MANAGEMENT GOALS
Delayed retirements can reduce employers’ ability to hire new employees.
INCREASE ACTIVE INSURANCE COSTS
Older employees (and retirees, if on the active plan) increase longevity risks and medical costs.
EXPAND UNFUNDED DEFINED BENEFIT LIABILITIES
Unfunded defined benefit promises can create unsustainable open-ended obligations that threaten long-term fiscal viability.
MEDICARE REALITIES
Medicare is not enough
Medicare is viewed as the primary safety net for post-65 retirees, but in reality, Medicare does not cover some existing and many emerging areas of healthcare. It’s also likely that Medicare will be unable to keep pace with the increasing costs of healthcare.
MEDICARE IS NOT ENOUGH, COVERING ONLY ABOUT 62% OF TOTAL HEALTHCARE COSTS IN RETIREMENT. RETIREES ARE RESPONSIBLE FOR NEARLY 40% OF THEIR HEALTHCARE EXPENSES IN RETIREMENT¹
DEEPER DIVE: Download A, B, C, Ds of Medicare booklet.
NEXT STEPS
A total benefits approach creates better outcomes
By complimenting your existing retirement plan with a Retirement Healthcare Savings Program, you can provide employees with an additional option to save for retirement expenses, while you maintain control over institutional costs.
Enable your employees to plan for a more secure and timely retirement
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Attract and retain qualified employees in a competitive job market
Include retiree health benefits for targeted key and executive positions
Reduce financial risks associated with defined benefit retiree health promises
Optimize the total value of your employer retirement benefit spend
Strengthen fiscal control over your benefit commitments
DEEPER DIVE: Download Retiree Healthcare Challenge whitepaper .
NEXT STEPS
Balancing what’s best for employers and employees
A fully-funded defined contribution approach may be the solution.
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*EBRI Notes, December 20, 2017, Vol. 38, No. 10. National average. Savings needed for Medigap Plan F premiums, Medicare Part B premiums and out-of-pocket (median) drug expenses. Does not include Long Term Care. For a couple who have a goal of having a 90 percent chance of having enough savings to cover health care expenses in retirement they need $273,000.
**HealthView Services Financial, HealthViewInsights: 2016 Retirement Health Care Cost Data Report.
1National Institute on Aging, Newsroom, Dramatic changes in U.S. highlighted in new census, NIH report, June 26, 2013.