Most Americans nearing retirement age expect to enjoy themselves after leaving the workforce, with unlimited free time to spend with family and friends, travel, and engage in personal projects or goals. At the same time, many people are not confident about covering basic expenses in retirement, and even fewer people are positive about their ability to afford extras like travel and hobbies, according to a 2013 survey.
And in spite of some improvement in the economy, an alarming 55% of working Americans are in only fair or poor condition when it comes to being able to completely cover estimated essential living expenses in retirement, including housing, health care and food, according to Fidelity Investments’ Retirement Preparedness Measure. The measure is based on an annual Retirement Savings Assessment survey of more than 2,200 households in a wide cross-section of the population. The accompanying Fidelity article at this link also suggests a number of steps everyone can take to become financially better prepared for retirement.
In today’s environment, health care expenses are anxiety provoking. AARP estimates that only a third of Americans in their fifties and early sixties have tried to estimate how much money they will need for medical expenses in retirement, and those who have tried greatly underestimate the amount required. In fact, Fidelity estimates that an average couple retiring at age 65 in 2013 will need $220,000 for their health care costs in retirement. Your personal situation may differ. To help people get a more customized estimate, AARP has introduced a new online health costs calculator, available for free on the AARP’s website. The tool is based on a proprietary database of more than $136 billion in insurance claims. Registration, name and address are not required, but you will need to enter age, gender, height, weight, life expectancy and retirement location. Information about various medical conditions is also required. You will get an estimate of total expenses, what portion Medicare is expected to cover, and what your out-of-pocket costs may be.
No matter your current age, it is important to take advantage of the many information resources available for retirement planning. The more that is understood about what will be required and the sooner you get started on your plan, the better prepared you will be.
Be sure to watch for upcoming investment, financial and retirement planning workshops at Naperville Public Library.