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If you think losing money is the biggest financial fear of the rich, you're right. But the key is what they think will erode their fortune. It's not bad investments; it's the cost of health care.
A survey by Nationwide Financial showed that nearly half of wealthy Americans approaching retirement are "terrified" of how health care costs could decimate their retirement plans. Many don't have a grasp on health care costs and how much is covered under Medicare. The respondents, all with at least $250,000 in investable assets, estimated that 68 percent of their medical costs will be covered under Medicare when in fact, it's about half, according to the Employee Benefits Research Institute. And obtaining private medical insurance for the years leading up to Medicare eligibility can be very costly.
Unfortunately, there are no good answers, but depending on age, general health, lifestyle and amount of assets, there are strategies for lessening the fear. The key is in the planning, as well as in understanding what Medicare and its supplements will cover. Those who think they won't visit the doctor too often can opt for high-deductible private insurance that ensures coverage of catastrophic health issues. Others might structure annuities that kick out income to cover regular health care costs. Some states have subsidized insurance plans that are worth investigating.
Do you have a plan for how to cover health care costs as you approach retirement?
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