Health care costs are increasing faster than any other expense (except maybe the cost of college). Which probably explains why one of the most common questions we hear is, “How much should I budget for health care costs in retirement?” My knee-jerk response usually is, “It depends.” That’s such a weaselly answer. This article is much better. It tells you how much health care will cost in retirement – at every age. For example, you’ll see why health care costs will soak up 48% of a 66-year-old couple’s lifetime Social Security benefits and 72% of a 45-year-old couple’s. Our experience is that this is an issue that many retirees and pre-retirees don’t want to face. But it might be even more expensive to ignore it.
Ever wonder how your retirement savings compares to others? America’s largest retirement-plan provider has just released the average 401(k) balances according to age. For example, in the 2nd quarter of 2018, the average Fidelity 401(k) account balance for workers age 50 to 59 was $174,200. Fidelity also reports the average contribution rates by age. Keep in mind that these are folks with Fidelity 401(k) accounts – not the average Joe. Sadly, 1 out of 3 American citizens have under $5,000 saved for retirement. Fidelity estimates you need 10 times your final salary in savings if you want to retire by age 67. See what they recommend you have saved by your age:
Earlier this month, professional football player Vontae Davis of the Buffalo Bills announced his retirement – effective immediately – during halftime of their game against the Los Angeles Chargers. Yes, he retired in the middle of an NFL game. “He said he’s not coming out [of the locker room]. He retired,” Bills linebacker Lorenzo Alexander told reporters. Given the latest research on concussions and head trauma for football players, perhaps Mr. Davis made a wise choice. However, not sure he gave much thought to retirement planning. Here, Sara Zeff Geber, Ph.D., gives a bit more thought to the question of when to retire: