illustration of medicare on blue background

How Medicare impacts a client’s retirement income

July 14, 2021

When it comes to retirement benefits, my Grandpa Sam sure had it good. When he retired in 1974, he had an employer funded pension and employer sponsored health care. He even received a watch and a bronze plaque for safely driving his 18-wheeler for more than 20 years. How times have changed.

As health care costs rise, so does uncertainty

For most Americans today, health care is expected to be one of our largest expenses in retirement. Unlike previous generations that might have retired with employer sponsored benefits, there is a good chance that we will be responsible for covering a lot of our own health care costs in retirement.

Recent survey data from the Nationwide Retirement Institute® tells us that three out of four future retirees are somewhat or very concerned about the cost of health care1. Future retirees, recent retirees, and those already retired for ten years or more are all likely to feel stressed about health care costs2. In fact, they are more worried about Health Care costs than they are other important considerations like Social Security, paying taxes, and overall retirement readiness3.

A large majority (67%) of future retirees feel unprepared to make good decisions and wish they understood Medicare coverage better4. I had personally witnessed this as I sat at my mom’s kitchen table and broke the news to her that her Medicare medical (Part B) and prescription benefits (part D) were not premium free. To complicate matters, she did not realize that her Part B premiums would be paid for directly out of her Social Security benefits which she had already started a few years earlier.

Providing insights into coverage options

That kitchen table conversation with my mom almost 15 years ago was an eye opener for me. I thought if my mom is wrestling with this, how many other retirees might be struggling with the same thing? That’s when I knew I needed to learn more about Medicare. Since joining the Nationwide Retirement Institute® 10 years ago, I’ve met with hundreds if not thousands of couples and individuals, just like my mom, who believed Medicare would cover most if not all of their health care costs in retirement. Yet, as we all know now, it doesn’t. That’s where we are helping.

Our educational resources provide much needed insights into Medicare coverage. With that picture of near retirees sitting at their kitchen tables in mind, contemplating their Medicare enrollment, we take the time to explain the different parts of Medicare; Hospital (Part A), Medical (Part B), Prescription Plans (Part D), Advantage Plans (Part C) and Supplemental Plans.

Additionally, we help break down and compare Original Medicare with Medicare Advantage plans, discuss enrollment options and deadlines, and take the time to also address what Medicare doesn’t cover. We even spend time addressing the interactions between Medicare and Social Security, something my mom would have appreciated knowing in advance.

Helping to prepare clients through innovative partnerships

Regardless of the study you read, they mostly tell us that health care costs will be meaningful over the course of our retirement lifetimes. Grandpa Sam made it to his mid-60s. My mom made it to her late 70s. The good news is, our generation is living longer than the generations that have preceded us. The bad news is, the longer we live, the more years we will need to pay for our health care.

Numbers like this are general and hypothetical. In this case, they are for a 65-year-old couple. How do you make sense of these numbers if you’re not 65? What if you’re single? Nationwide® can help you move closer to achieving your goals by factoring in the specifics for you.

You may know Nationwide® for helping prepare folks for healthcare costs in retirement. Recently, we have taken this a new level by partnering with the National Council on Aging and launching a new tool, My Medicare Matters®. This tool provides a clear and friendly guide to help those with Medicare (and those planning to enroll in Medicare) evaluate their individual needs, compare their options, enroll in a plan, and sustain the best option for years to come.

We know that planning for health care in retirement is likely one of your client’s top concerns. And while we are not in the business of offering nice retirement watches or bronze plaques, the Nationwide Retirement Institute® is in the business of providing you with the insights, education, and planning resources you need to help you and your clients make informed, confident choices and help turn their concerns into a plan.

Sources / Disclaimers

  • 1

    Nationwide Retirement Institute’s ninth annual Health Care Consumer survey conducted May 7 – May 26, 2020 among 1,940 U.S. adults age 24 or older.

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  • Neither Nationwide® nor any of its affiliates are related to or affiliated with the National Council on Aging (NCOA).

    Nationwide® has a paid sponsorship agreement in place with the National Council on Aging (NCOA) to help promote financial wellness concepts for older consumers.

    My Medicare Matters® is a registered trademark of the National Council on Aging.