Baby boomers unprepared for rising healthcare costs

SCHAUMBURG, Ill. — Nearly half (48%) of Americans between the ages of 45 and 70 years have no financial plans in place to protect themselves against outliving their assets and the rising cost of health care, should they live longer than they expected, according to a survey released last week by the Society of Actuaries.

"It's apparent that Americans, specifically the baby boomer generation — many of whom will be eligible for retirement the beginning of the new year — have not saved enough money for retirement," stated Anna Rappaport, president of Anna Rappaport Consulting. "With the challenges in the housing and financial markets over the past few years, coupled with the fact that people are living longer, many baby boomers are finding themselves unprepared to maintain their lifestyle in retirement. As actuaries, we cannot stress enough the importance of having a plan in place that addresses all of the risks individuals may face in retirement, such as spending available assets too soon, meeting financial care needs, paying for the rising cost of health care and adjusting financially and otherwise to the loss of a spouse."

The survey also found that nearly 71% of respondents plan to claim social security before the age of 70 years.

Looking at other actions Americans take to protect themselves and hedge against potential future risks, the SOA survey found that 75% of Americans ages 45 to 70 years protect their tangible assets, such as housing, through home or renter's insurance; however, only 19% plan to insure the extra costs of disability and well-being by purchasing long-term care insurance.

The SOA's survey findings were based upon a nationally representative online survey of 1,006 individuals, ages 45 to 70 years, and had an error rate of plus or minus 3.1 percentage points.