January 6, 2020
With 2019 behind us, we have some new data at hand regarding health care for US retirees. While it isn’t all great, we did see one trend that will be good news to seniors.
Fidelity Investments’ report Health Care Price Check found that in 2019, a 65 year-old couple entering retirement can expect to cover $285,000 ($150,000 for women and $135,000 for men) in out of pocket medical expenses throughout their retirement years. The good news is that while it is an increase over the previous year (up 3.6%), it was a much smaller increase than that of 2015-2017 (up 12.2%).
The bad news is that, according to the Federal Reserve’s latest Consumer Finance study—from 2017, there is a new study being conducted now but it has not yet been completed—the conditional median balance of US retirement accounts was only $60,000 and the conditional mean retirement account balance was $228,900. Either way that you look at the data, there is an obvious shortfall once post-retirement healthcare costs are considered.
But unfortunately, the cost of long term care services is on the rise. Genworth’s 2019 Cost of Care Survey shows increases in cost across the board: Home Care increased 4.55% (to $52,624/year), Assisted Living increased 1.28% (to $48,612/year), and Nursing Homes increased 1.82% (to 102,200/year). According to the US Department of Health and Human Services, nearly 70% of those turning age 65 today will need some form of long term care.
Luckily for those retirees in need of assistance with medical bills and long term care services, there has also been an increase in awareness of a powerful option to tap a life insurance policy to help cover those expenses. A life settlement allows a policy holder who no longer wants, needs, or can no longer afford their life insurance policy premiums to sell their policy to a third party for an amount that is greater than the policy’s cash value but less than the death benefit that the policy would eventually pay out. The industry new service The Life Settlement Report found that in 2018 there was a 28% increase in policies sold (to 2,587 policies sold), and there was an increase of $1B in face amount—for a total of $3.8B in life insurance that was sold through life settlement transactions. To find out if a life settlement is right for you, you should reach out to a life settlement provider or broker that is licensed in your state, or contact Q Life Settlements and we can discuss your specific policy!