Rapidly increasing healthcare costs are also a concern for people as they think about retirement. The study found that more than half (52%) of retirees said they view rising healthcare costs as one of the greatest risks to their retirement security, with nearly 40% of people not yet retired sharing that concern about their future expenses.
Perhaps even more alarming, both groups seem to have a poor sense of what their healthcare costs are now or will be in the future. Nearly half (48%) of current retirees said they have no idea of how much they currently spend on healthcare costs, and more than six in 10 (62%) people who have not yet retired said they have no idea of how much they will spend on healthcare in retirement.
If these costs weren’t already complex enough, trying to manage rising costs in retirement can be made even more confusing as clients age and their ability to manage complex financial matters likely diminishes over time.
As a financial professional, helping clients understand the true impact of inflation is important when building their overall retirement strategy. This is particularly true for clients who live on a fixed income solution, or who plan to rely more heavily on Social Security, which typically does not keep pace with inflation.
At the same time, having an honest conversation about the potential for cognitive decline can be helpful. While diminished mental capacity is certainly not something people like to think about, it’s still an important consideration as clients build a retirement strategy.