Paying for health care expenses represents the biggest financial worry of American retirees, but it may be an even bigger problem than they think.
More than 40 percent of retirees incorrectly believe that Medicare will cover nearly all their health care costs, and most vastly underestimate how much money they’ll actually need, according to a new report from Bank of America Merrill Lynch and Age Wave.
A married couple that wants 90 percent certainty they’ll be able to pay out-of-pocket health-related expenses in retirement needs to have saved $259,000, the report finds, more than the average American has in home equity or net worth.
That estimate doesn’t include the cost of long-term care, another area in which most retirees underestimate their need. Only 37 percent of people expect that they’ll require long-term care, although nearly twice that many actually do, according to the report.
More than 80 percent of retirees said that maintaining good health is the most important aspect of achieving a happy retirement, making it important for even more people than financial security.
When financial worries are taken out of the picture, the biggest longevity fear among retirees is losing physical and mental function. More than half of those surveyed fear Alzheimer’s or dementia, making it scarier to a larger percentage of retirees than all other major diseases combined.