Health care in retirement

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1 Health care in retirement Today s discussion Retirement health care Information about options Prepare for the unexpected Health care in retirement: Why the concern? 1

2 Average 65-year-old man will live another 18 years Average 65-year-old woman will live another 21 years Source: Center for Diseases Control (CDC) A 65-year-old couple retiring today will need an average of almost $259,000 to cover medical expenses throughout retirement Employee Benefits Research Institute, October 2015, Vol. 36, No. 10. Be informed of your options 2

3 How will Medicare help? Primary health insurance provider for most Americans 65 and older Will not cover all of your health care costs medicare.gov MEDICARE ( What is long-term care? 70% over the age of 65 will likely need some sort of long-term care* Average annual costs:** $83,114 $42,864 $31,916 $25,550 Nursing home Assisted living Home health aide Adult day services * National Clearinghouse for Long Term Care Information, U.S. Department of Health and Human Services (longtermcare.gov). ** Source: New York Life, Cost of Care Survey, How can long-term care insurance help? Pays for expenses related to your care Premiums vary based on age and health status Talk with someone you trust Visit longtermcare.gov or naic.org 3

4 Consider a Health Savings Account (HSA) How an HSA works Health Savings Account (HSA) Save HSA Pay Use your HSA to pay your portion of your healthcare costs HSA-qualified health plan You pay 100% You pay a percentage (coinsurance) All plan costs are covered Deductible Out-of-pocket maximum * HSA funds must be used for qualified medical expenses to receive tax-advantaged treatment. Boost your retirement savings Use your HSA for: Qualified healthcare expenses Medicare premiums 1 Medicare out-of-pocket expenses Use your IRA/401(k) for: Living expenses Leisure activities Necessities Long-term care premiums 2 1 Premiums for a Medicare supplemental policy are not a qualified expense. 2 Long term care premiums are subject to the deduction limits for long term care insurance premiums. 4

5 Part of your overall retirement plan 30 years 20 years 10 years $3,000 annual contribution Invested at 6% annual average return $30,000 could become $43,000 $60,000 could become $120,000 $90,000 could become $250,000 INVESTMENT PRODUCTS: NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE This example is for illustrative purposes only. Individual situations may vary. All examples assume HSA-qualified health plan coverage. HSA investment income is based on a hypothetical annual rate of return of 6% with the HSA contribution amount saved for future use and compounded annually until retirement. This example is not intended to imply or guarantee a specific investment return. Investment earnings will depend upon investment selection and length of investment time. HSA balance at retirement includes total annual HSA contributions saved for future use plus HSA investment income until age 65. How much can you contribute? 2016 Individual only $3,350 Individual + spouse, children or family $6,750 Annual catch-up contribution, age 55 or older $1,000 Annual HSA limits include any contributions made by your employer. For questions, consult your tax advisor. Prepare now for the unexpected 5

6 AARP Health Care Costs Calculator Information on third-party sites are provided for your convenience only. Wells Fargo neither endorses, monitors, nor guarantees the accuracy of information of third party websites. Third-party websites may not follow the same privacy, security, or accessibility standards as Wells Fargo's website. Wells Fargo is not responsible for the security, content, or availability of third-party websites or any reliance thereon. Make smart choices today Consider prescription expenses Take charge of your health Do your research Save, save, save Ask for generic option Consider mail order or 90-day prescriptions Shop and compare the same medication could cost less at another pharmacy Exercise regularly Eat healthy Stay connected with family, friends Stay productive work, volunteer, keep busy Use health care expenses calculator (AARP, etc.) Consider long-term care insurance Use online tools to research costs and alternatives Discuss with loved ones Contribute to HSA or FSA if available Save at least 10% in your employer-sponsored retirement plan Increase contribution amount regularly Thank you Recordkeeping, trustee, and/or custody services are provided by Wells Fargo Institutional Retirement and Trust, a business unit of Wells Fargo Bank, N.A. This information and any information provided by employees and representatives of Wells Fargo Bank, N.A. and its affiliates is intended to constitute investment education under U.S. Department of Labor guidance and does not constitute investment advice under the Employee Retirement Income Security Act of Neither Wells Fargo nor any of its affiliates, including employees, and representatives, may provide investment advice to any participant or beneficiary regarding the investment of assets in an employer-sponsored retirement plan. Please contact an investment, financial, tax, or legal advisor regarding your specific situation Wells Fargo Bank, N.A. All rights reserved