Big Retirement Threat

Written by Joel Bruckenstein, FA Magazine Friday, 17 August 2012

Aside from another market crash, health-care costs are perhaps the greatest threat to a secure retirement. Most Americans rely on some sort of employer-subsidized health insurance. When they reach age 65, they typically rely on Medicare and/or supplemental insurance. In the past, some had access to employer-sponsored health benefits, but that type of benefit is becoming increasingly rare. The net result is that more Americans than ever are going to be relying on Medicare at a time when the system’s ability to pay its bills is in jeopardy.

Over the next 20 years, it is estimated that 10,000 people per day will enter the Medicare system as they turn 65. As financial advisors are well aware, Medicare is not free. There are premiums to be paid, coverage gaps, co-pays and other out-of-pocket expenses that can have a significant impact on retirees’ financial health. In addition, it is clear to most observers that with the coming increase in Medicare subscribers, the current system is unsustainable. In the future, they will likely see reduced benefits, increased costs or a combination of the two. Read More..