New Resource for Managing Health and Finances During Retirement

MINNEAPOLIS (February 28, 2018)—Rising health care costs have long weighed on the minds of working Americans. But according to new research from Ipsos and RBC Wealth Management—U.S., most people don’t give enough thought to how much those costs may increase in retirement and how they will afford them once they leave the workforce.

To help investors better plan ahead, RBC Wealth Management created “Taking control of health care in retirement,” a straightforward guide to understanding and managing the many components of care for aging Americans.

“Health care is one of the largest expenses we will face in retirement,” said Michael Armstrong, CEO of RBC Wealth Management-U.S. “If not properly accounted for, these costs can derail even the most solid retirement plan.”

Investors aren’t entirely oblivious to the challenge health care costs can pose. In fact, 80 percent of Americans surveyed by Ipsos on behalf of RBC Wealth Management say they are worried about funding the costs of health care as they age. Despite those concerns, only 56 percent of respondents said they have factored health care into their retirement plan. Even half of those who have indicated they have planned for health care costs admit they’ve likely underestimated costs.

“Taking control of health care in retirement” draws on multiple sources of information and tools to help investors estimate how much they can expect to pay for health care once they retire and provides actionable steps they can take. Key considerations include: expected length of retirement, life expectancy, how gender impacts health care costs, and the need for costly maintenance procedures such as joint replacement or cataract surgery.

“While the exact cost varies for each individual, most people should expect health care to be their second-highest expense in retirement, trailing only housing,” said Angie O’Leary, Head of wealth planning at RBC Wealth Management-U.S. “Even a healthy 65-year old couple today can expect to spend more than $400,000 on health care in retirement.”

The report explores a variety of tools—from Health Savings Accounts (HSAs), Roth 401(k)s and life and disability insurance—to help Americans manage these costs. It also explores the basics of long-term care and the options investors have to pay for it.

“Understanding how you will fund health care as you age is one of the most important steps you can take in the wealth planning process,” O’Leary said. “But because it’s such a complex thing to plan for and can be so emotionally charged, most people put off thinking about it until it’s too late.”

Visit rbcwealthmanagement.com for more information