The costs of medical and long-term care are often underestimated, and some retirees do not even consider them—and yet they are one of the primary reasons that people run short of money in retirement.

According to a May 7, 2012 survey, conducted by Harris Interactive for Nationwide Financial, nearly half of high-net-worth Americans who are close to retirement are “terrified” of what health care costs could do to their retirement plans. But 38 percent of those surveyed said that they haven’t discussed retirement health-care costs with a financial advisor, in part because they are unsure as to whether their advisor is knowledgeable about the issue. This is not a good sign.

To put it in perspective, several years of care can wipe out half a million dollars of life savings. “Well, it’s not going to happen to me,” you may think, but statistically, it could. The lifetime chance that someone who buys a policy at age 60 will use their policy before they die is 50 percent. A more responsible approach is to analyze the cost and look for ways to fund it*.

People may think they will need to pay for the cost of insurance out of their cash flow—and as a result, they worry that they won’t be able to go out to dinner or visit the grandkids or play a round of golf. But often they do have money, perhaps half a million or so, so the fact that they have assets is what raises the issue. If they had no money, then Medicaid could be their plan.

Ultimately, medical and long-term care should be considered and planned for.

insure-your-health-for-the-long-term-now

*Long term care probability or the risk you’ll need long term insurance. Copyright ? 1998 – 2014 AALTCI   http://www.aaltci.org/long-term-care-insurance/learning-center/probability-long-term-care.php