Latest news with #Fidelity
Yahoo
9 hours ago
- Health
- Yahoo
No relief: Retirees' out-of-pocket healthcare costs are spiraling
Retirees are going to need to have a substantial chunk of change saved to pay for their healthcare costs. Fidelity's annual survey of estimated healthcare costs in retirement shows that a 65-year-old retiring this year can expect to spend an average of $172,500 in healthcare and medical expenses out-of-pocket throughout retirement, up 4% from last year's expectation of $165,000. The estimate assumes enrollment in traditional Medicare (Parts A and B) and Medicare Part D, which includes premiums, co-payments, and other out-of-pocket costs for medical care and prescription drugs. It could be far higher for some folks. Fidelity's estimate does not include long-term care expenses which, of course, can be eye-popping. 'About 80% of those ages 65 and over will require some long-term care, with nearly 20% requiring high-intensity care for more than three years,' said Anqi Chen, associate director of savings and household finance at the Center for Retirement Research at Boston College. Consider this: An apartment in an assisted-living facility had an average rate of $74,148 a year in 2024, according to the National Investment Center for Seniors Housing & Care — and costs go up as residents age and need more care. Units for dementia patients can run more than $94,000. Costs keep on rising The Fidelity estimate has soared since it first ran this calculation in 2002. At that time, medical costs were estimated at $80,000 for a single retiree. Of course, there are plenty of caveats to consider when computing your figure — what you spend in retirement for medical care will depend on where you live, your overall health, and how many years you will live in retirement. Nonetheless, basic costs are continuing to rise. In 2025, for example, the monthly Part B premium rate is $185, up from $174.70 a year ago. The estimated monthly premium for 2026 is $206.20. 'Planning for healthcare costs in retirement is a crucial step in building long-term financial security, yet it's often overlooked,' John Burns, vice president at Fidelity Investments, told Yahoo Finance. Every generation is unprepared Recent Fidelity research shows 1 in 5 Americans say they have never considered healthcare needs during retirement — a figure that jumps to 1 in 4 among Gen X. Few retirees have budgeted for that kind of outlay and finding ways to grapple with it is not something you can avoid. About 15% of the average retiree's annual expenses will be health-related, per Fidelity. And nearly 4 in 10 retirees report health care expenses are higher than they expected, according to a survey by the Employee Benefit Research Institute and Greenwald Research. View Comments
Yahoo
10 hours ago
- Business
- Yahoo
Retirees face staggering 6-figure health care bill when leaving the workforce
A 65-year-old retiring in 2025 can expect to pay $172,500 on average for healthcare and medical expenses throughout retirement. That's according to Fidelity's 2025 Retiree Health Care Cost Estimate, which is up 4% from the year before. It highlights the general upward trajectory of health-related expenses that have occurred since Fidelity's first estimate of $80,000 in 2002. The report underscores an even bigger issue: 17% of all respondents have taken no action at all when it comes to planning for health expenses in retirement. One in five respondents said they never consider healthcare needs during retirement. With Gen X, that rises to about one in four. Health Care Costs For Retirees Continue To Soar Fidelity's estimate assumes enrollment in Medicare (Parts A and B) and Medicare Part D, which includes premiums, co-payments and other out-of-pocket costs for medical care and prescription drugs. However, it does not include long-term care expenses. For instance, even with Medicare, retirees are responsible for Medicare premiums, over-the-counter medications, dental and vision care as well as other types of added expenses like long-term care, according to Fidelity. Some of those costs can be offset with enrollment in Medicare Advantage plans, but those require separate monthly premiums. Read On The Fox Business App Chandler Riggs, vice president of financial consultancy at Fidelity Investments, told FOX Business that the rise in healthcare costs is driven by several factors, notably longer life expectancies, as well as a healthcare inflation rate that has outpaced general inflation. Despite the daunting figure, Riggs called Fidelity's estimate an "important wake-up call for all generations." "It's not just a benchmark for retirement readiness but also underscores the importance of planning as early as possible," Riggs said. Social Security Confidence Hits 15-Year Low As Younger Americans Increasingly Lose Faith In System Matthew Gregory, planning director for private wealth management firm The Bahnsen Group, said people grow accustomed to a hands-off approach during their working years since a meaningful piece of the cost can come directly out of their paycheck. "They may not be thinking about the need for supplemental coverage on top of Parts A and B of Medicare, as well as the fact that Medicare does not cover most long-term care costs. Those expenses can snowball quickly and become a reality check," he said. Likewise, Riggs said that people who have health coverage through their employer won't consider how they'll cover medical expenses when they retire and are no longer enrolled in their employer's health plan. This wake-up call for people near retirement could force them to question whether they have saved enough for retirement, if they can accomplish their goals with the funds they have and if they need to delay retirement entirely. "They may also end up settling for a level of coverage that is far less than they would otherwise be comfortable with or leaning on family members to fill gaps in care," Gregory said. This data comes shortly after an AARP study found Americans' confidence in Social Security – often seen as a safety net program because it provides a financial foundation for retirees – was also on the decline. The data, which was published earlier this week, showed that Americans' overall confidence in Social Security dropped from 43% in 2020 to 36% in 2025, the lowest level since it fell to 35% in 2010. Despite these findings on retirement readiness and growing uncertainty about long-term financial support, Riggs underscored that there are always steps someone can take to better position themselves financially, regardless of where they are in their retirement journey. Riggs said saving early and leveraging accounts where savings can be invested are powerful tools to build a "healthcare nest egg, regardless of age." Additionally, Riggs said employees who are enrolled in an HSA-eligible health plan should consider using a health savings account. For one, the triple-tax advantage of HSAs makes them a versatile tool to save and pay for health expenses. The contributions are tax-deductible, and the HSA dollars can be spent tax-free when used for qualified medical expenses. Any potential growth in money invested is tax-free as well, Riggs article source: Retirees face staggering 6-figure health care bill when leaving the workforce
Yahoo
15 hours ago
- Health
- Yahoo
No relief: Retirees' out-of-pocket healthcare cost are spiraling
Retirees are going to need to have a substantial chunk of change saved to pay for their healthcare costs. Fidelity's annual survey of estimated healthcare costs in retirement shows that a 65-year-old retiring this year can expect to spend an average of $172,500 in healthcare and medical expenses out-of-pocket throughout retirement, up 4% from last year's expectation of $165,000. The estimate assumes enrollment in traditional Medicare (Parts A and B) and Medicare Part D, which includes premiums, co-payments, and other out-of-pocket costs for medical care and prescription drugs. It could be far higher for some folks. Fidelity's estimate does not include long-term care expenses which, of course, can be eye-popping. Sign up for the Mind Your Money weekly newsletter By subscribing, you are agreeing to Yahoo's Terms and Privacy Policy 'About 80% of those ages 65 and over will require some long-term care, with nearly 20% requiring high-intensity care for more than three years,' said Anqi Chen, associate director of savings and household finance at the Center for Retirement Research at Boston College. Consider this: An apartment in an assisted-living facility had an average rate of $74,148 a year in 2024, according to the National Investment Center for Seniors Housing & Care — and costs go up as residents age and need more care. Units for dementia patients can run more than $94,000. Costs keep on rising The Fidelity estimate has soared since it first ran this calculation in 2002. At that time, medical costs were estimated at $80,000 for a single retiree. Of course, there are plenty of caveats to consider when computing your figure — what you spend in retirement for medical care will depend on where you live, your overall health, and how many years you will live in retirement. Nonetheless, basic costs are continuing to rise. In 2025, for example, the monthly Part B premium rate is $185, up from $174.70 a year ago. The estimated monthly premium for 2026 is $206.20. 'Planning for healthcare costs in retirement is a crucial step in building long-term financial security, yet it's often overlooked,' John Burns, vice president at Fidelity Investments, told Yahoo Finance. Every generation is unprepared Recent Fidelity research shows 1 in 5 Americans say they have never considered healthcare needs during retirement — a figure that jumps to 1 in 4 among Gen X. Few retirees have budgeted for that kind of outlay and finding ways to grapple with it is not something you can avoid. About 15% of the average retiree's annual expenses will be health-related, per Fidelity. And nearly 4 in 10 retirees report health care expenses are higher than they expected, according to a survey by the Employee Benefit Research Institute and Greenwald Research. Increasing out-of-pocket healthcare costs, including the likelihood of long-term care expenses, is a huge concern for retirement security, said Richard Johnson, director of the Program on Retirement Policy at the Urban Institute. Even now, 1 in 10 people age 65 or older with healthcare debt owe $10,000 or more, according to a KFF study. Potential but underutilized way to defray costs For younger workers, one way to prepare for higher future costs is to invest in a health savings account (HSA). An HSA lets you put money in on a tax-free basis, lets it build up tax-free, and lets it come out tax-free for qualified healthcare expenses. (One downside: Some states assess state taxes.) To put money into an HSA, you must be enrolled in a high-deductible health plan where you pay a lower premium per month but a higher annual deductible. You can also open an HSA as a self-employed freelancer or business owner if you have a qualified high-deductible health plan. Your contributions roll over year after year and are yours to take along when you retire or change employers. The 2025 contribution limit for an HSA is $4,300 for individuals and $8,550 for families. Individuals who are 55 or older can contribute an additional $1,000. These accounts got small tweaks expanding access in Trump's tax package. Read more: HSA contribution limits: Here's how much you can save 'HSAs are a smart way to plan ahead for the rising cost of healthcare and help protect your retirement income,' Burns said. 'Save as much as you can, when you can, and make sure you leverage accounts where your savings can be invested.' In the real world, though, most account holders pull funds from their HSAs to cover current medical bills. The average withdrawal from an HSA account last year was roughly $1,300, according to HSA advisory firm Devenir.'People use it as a checking account, not an investment account,' Paul Fronstin, director of health benefits research EBRI, said. They're using it to cover current healthcare expenses right now. Plus, maxing out a contribution each year is unrealistic for many workers. 'Most people have competing needs ... if you're coming out of school, you've got student loans, if you've got children, or you're buying a house, trying to save for retirement, helping your kids with their school, and so on,' he said. Read more: How much should I have saved by 50? Only about 3.2 million health savings accounts have at least a portion of their HSA dollars invested, per Devenir. Most just leave the money in cash or spend on current bills and lose sight of one of the account's key advantages that can help retirees meet these costs down the road. Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including the forthcoming "Retirement Bites: A Gen X Guide to Securing Your Financial Future," "In Control at 50+: How to Succeed in the New World of Work," and "Never Too Old to Get Rich." Follow her on Bluesky. Sign up for the Mind Your Money newsletter
Yahoo
a day ago
- Business
- Yahoo
4 Things To Know About Inheritance Before You Pass Anything on
None of us will be there to make sure the transfer of our assets goes smoothly after death, so the time to plan and prepare is while you're still alive. Explore More: Check Out: Consult with an estate planner to craft a comprehensive strategy, but make sure you understand the following key points about leaving an inheritance today. Estate Planning Is for Everyone, Not Just the Rich There's a common misconception that estate planning is for wealthy benefactors with vast, valuable and complex assets to pass down to their heirs. That's a large part of why the 2024 Wills and Estate Planning Study found that just 32% of Americans have even a basic will — 40% don't think they have enough assets to make it worth their while. Explaining the harm in this disconnect, the study's authors suggest that everyone over the age of 18 should have a will because, in addition to assuring the distribution of financial assets according to your instructions, they also: Give you control over crucial healthcare decisions. Determine the fate of your social media accounts and other digital property. Provide binding guidance on how children should be cared for and by whom. For You: Without a Will, the Courts Decide Who Gets What According to Estate & Will, dying without a will is called intestacy, and the assets of those who die intestate are immediately frozen by the courts, which then appoint someone to pick through every financial detail and apply their state's intestacy laws — which vary considerably — to determine who gets which assets. It's a long, exhausting and frustrating process that does not consider family dynamics or the wishes of the deceased and often leads to infighting and lawsuits — and it's expensive, costing as much as 7% of the deceased's estate. Trusts Offer More Privacy, Protection, Control and Tax Relief Than Wills Like estate planning, in general, people tend to associate trusts with the wealthy and elite. However, like wills, they're just a set of legal instructions from which many people across the income spectrum can benefit — and the benefits are numerous. According to Western & Southern Financial Group, there are many kinds of trusts, but overall, they: Avoid probate: Even with a will, most estates still must go through probate court. Trusts generally do not. Offer privacy: Wills are on the public record. Trusts remain private after death. Provide greater flexibility and control: Unlike wills, trusts can be written to accommodate numerous contingencies regarding asset distribution, including while the trustor is still alive. Have tax advantages: Some types of trusts are designed to minimize estate and inheritance taxes, which wills do not. Stepped-Up Basis: The Phrase Every Long-Term Property Owner Must Know According to Fidelity, the stepped-up basis rule adjusts the value of inherited property and other assets to their fair market value at the time of the owner's death. Anyone considering selling an appreciated asset in later life must understand the implications before cashing out. Consider the following example: You bought a house for $100,000 in the 1980s. The home has appreciated to a market value of $600,000 today. If you sell the home, you incur a capital gain of $500,000. If you instead leave it to a child, the stepped-up basis resets the market value to $600,000 upon your death. If the child then sells the property for $600,000, they will incur no taxable capital gain. More From GOBankingRates Mark Cuban Warns of 'Red Rural Recession' -- 4 States That Could Get Hit Hard How Much Money Is Needed To Be Considered Middle Class in Your State? The New Retirement Problem Boomers Are Facing This article originally appeared on 4 Things To Know About Inheritance Before You Pass Anything on Sign in to access your portfolio
Yahoo
2 days ago
- Business
- Yahoo
Gold prices steady as investors await Fed interest rate decision
Gold (GC=F) Gold prices were little changed on Wednesday morning as investors refrained from making significant moves ahead of the US Federal Reserve's latest interest rate decision, due later in the day. Gold futures were flat at $3,322.90 per ounce at the time of writing, while spot gold was also muted, at $3,330.98 per ounce. The Federal Reserve is expected to leave its benchmark interest rate unchanged within the 4.25% to 4.5% range despite persistent calls from US president Donald Trump to lower borrowing costs. Traders continue to price in a possible rate cut in September. "There could be a chance that the Fed may start to tilt towards the dovish side of the pendulum, and that is being portrayed on the Treasury yields," Oanda senior market analyst Kelvin Wong said. Expectations of looser monetary policy are contributing to bullish sentiment for gold, which has already gained more than 27% this year, outperforming most major asset classes. Read more: Should you invest in gold? Investment firm Fidelity believes bullion could climb as high as $4,000 an ounce by year-end, buoyed by a weakening US dollar and a pivot by the Fed towards rate cuts. Speaking to Bloomberg, Ian Samson, a fund manager at Fidelity, said the firm remains optimistic on the outlook for gold. 'The rationale for that was that we saw a clearer path to a more dovish Federal Reserve,' he said. Samson added that some cross-asset portfolios had increased their exposure after gold prices pulled back from a record high of $3,500 reached in April. In certain cases, allocations were doubled from an initial 5% over the past year. He also noted that August tends to be a softer month for risk assets, making diversification more appealing. 'More diversification makes sense,' Samson said. Oil (BZ=F, CL=F) Oil prices were mixed in early European trading as investors assessed potential geopolitical developments after US president Donald Trump significantly shortened his deadline for Russia to end its military campaign in Ukraine. Brent crude futures slipped 0.2% to trade at $70.22 per barrel, at the time of writing, while West Texas Intermediate futures climbed by 0.1% to $69.28 a barrel. The price moves came a day after Trump warned of sweeping measures against Russia, including the imposition of 100% secondary tariffs on countries continuing to trade with Moscow. The president said such measures would come into force unless progress was made towards ending the war within 10 to 12 days, an acceleration from the previously stated 50-day window. The announcement has heightened tensions with Beijing, Russia's largest oil customer. At a press conference in Stockholm, where US officials are holding trade talks with the EU, treasury secretary Scott Bessent warned that China could face 'substantial tariffs' if it continues its current purchasing practices. Read more: HSBC launches $3bn share buyback despite second-quarter profit plunge Analysts at JP Morgan noted in a report that while China is unlikely to adhere to US sanctions, India has indicated a willingness to comply, potentially jeopardising 2.3 million barrels per day of Russian oil exports. Meanwhile, in Venezuela, international partners of state oil company PDVSA remain in limbo as they await formal US approval to resume operations. Talks held last week between Washington and Caracas raised the prospect of easing sanctions, a move that could bring Venezuelan crude back to market and help offset upward pressure on global prices. Pound (GBPUSD=X, GBPEUR=X) The pound was muted against the dollar on Wednesday morning, trading flat at $1.3361, and is expected to remain under pressure as the Bank of England (BoE) is almost certain to cut interest rates in next week's monetary policy meeting. Markets have become increasingly confident that the BoE will reduce its key borrowing rates on 7 August as UK labour market conditions have cooled down, following an increase in employers' contributions to social security schemes. The US dollar index ( which measures the greenback against a basket of six currencies, was higher at 98.78. Stocks: Create your watchlist and portfolio Elsewhere in currencies, the pound was also muted against the euro, trading at €1.1563 at the time of writing. In equities, the FTSE 100 (^FTSE) was in the red this morning, down 0.3% to 9,107 in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
