Retirement Planning Needs to Include Discussions About Health Care Costs

While advisers say their clients display confidence about future health care costs, a recent Nationwide Retirement Institute survey finds they also say it is a top fear for many.

Conducted via The Harris Poll with 1,007 adults over age 50 and a household income of $150,000, the online study found 76% of advisers say their clients are confident in their plan to pay beyond what Medicare covers for health care during retirement. However, more than one in three (35%) clients do not share similar sentiments. Even though the remaining 65% of clients have a plan in place to cover these costs, 72% of advisers say clients do frequently express concerns about health care costs in retirement.

Nearly two-thirds (63%) of advisers say their clients expect advice on health care costs in retirement. In addition, 34% of advisers say their clients would likely leave them if they didn’t help them estimate and plan for out of pocket health care costs in retirement.

In addition, according to the survey, 73% of client respondents list out-of-control health care costs as one of their top fears throughout their retirement years. And, 35% of wealthy older Americans working with an adviser indicate that they are not confident in their plan to cover health care costs beyond what Medicare pays.

“Our survey reveals a gap between what advisers think and what many of their clients think when it comes to health care costs in retirement,” says Ron Ransom, senior vice president of integrated relationship strategies for Nationwide. “The rising costs of health care impacts everyone and many clients are worried. Advisers can build their confidence by having more conversations about their plan to cover those health care costs.” 

Impediments to discussing health costs in retirement

Dialogues on health care considerations between advisers and clients face challenges as certain participants feel uncomfortable reviewing the matter. The survey found 52% of clients have yet to openly discuss health care costs with their adviser; 37% say this is because they believe it is a personal issue.

Though the study reports advisers consider the topic “at least somewhat important” (98%) or “very important” (71%) to discuss with clients, 75% admit it is challenging.

“While often considered personal, you can’t adequately plan for health care costs without discussing the topic,” Ransom says. “Balancing health care costs with a lifestyle goals conversation may make it easier for the adviser to best address their client’s anticipated or unanticipated needs in retirement.”