retirement

Retirement Health Care For Retirees

It's not your father's retirement, thanks to health care costs.

Once they retire, workers today are less likely than their parents or grandparents to enjoy the standard of living that they did while they worked.

What's going to spoil the party? Health care costs are rising faster than wages. That's the key finding in a report from the Urban Institute and AARP Public Policy Institute. Retiree income is projected to fall from 80 percent of average career earnings for current retirees to 73 percent for future retirees, according to the report. Take into account health care costs and the figure drops further, to 55 percent of average career earnings. And these estimates assume no changes to future Social Security benefits.

Source: Report from AARP Public Policy Institute and Georgetown University.

In 2010, national health care spending averaged $8,402 per person. That's 72 percent higher than 10 years earlier, when it was $4,878, and nearly three times the 1990 level of $2,854, according to a study by the AARP Public Policy Institute and Georgetown University.

If only the economy were growing as much as health care spending. Between 2000 and 2010, health care spending per person grew at an average rate of nearly 6 percent a year -- much higher than the 2.4 percent inflation rate.

People 65 and older are the hardest hit. Future retirees are expected to spend 18 percent of their household income on health care expenses, compared to 8 percent for current retirees, according to the report.

The trend is delaying retirement for many. A recent survey from the Employee Benefit Research Institute found that overall, 53 percent of workers said they'd like to tear up their time cards for good, but they'll likely have to continue to punch the clock because they need to keep their employer-sponsored health insurance.

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Health care for retirees