Americans are clueless about retirement healthcare costs

Nine in 10 American workers either have no idea what their healthcare costs are likely to be in retirement or underestimate those costs, says a new consumer survey from Sun Life Financial.

In addition, 40 percent of those polled claim to have “no idea” what their retirement healthcare costs would reach, and only 8 percent estimate their costs will reach $200,000 or more.

According to a 2010 report from the Center for Retirement Research at Boston College, an average 65-year-old couple free of chronic disease can expect to spend $260,000 on remaining lifetime healthcare costs (including nursing home care). In addition, there is a 5 percent chance that those same costs could exceed $570,000.

[See also: Survey notes seniors' concerns over healthcare costs in retirement.]

“Flying Blind: How Working Americans View Healthcare Costs in Retirement,” is based on an online survey of randomly selected participants conducted in March 2011 by FH Research, with Knowledge Networks as the data collection partner. A total of 1,525 qualified respondents to the survey.

Nearly three-fourths of American workers lack plans to cover healthcare costs in retirement. That includes workers approaching age 65 – only 30 percent of workers in their 50s have established plans to meet future healthcare costs, and only 40 percent of workers in their 60s have adopted plans.

This lack of financial preparation spans all wealth levels. The survey found that although 75 percent of  workers with more than $250,000 in assets feel some level of confidence that they can meet healthcare costs in retirement, only 26 percent have established any plan for meeting those costs.

The survey found Americans deeply pessimistic about their future ability to pay for healthcare costs in retirement, with 43 percent of those polled stating they feel “not at all confident” and only 9 percent feeling “very confident.” This sentiment covers all ages, with half of workers in their 50s “not at all confident” in their ability to meet healthcare costs in retirement.

On a positive note, that lack of confidence in meeting healthcare expenses in retirement is fueling a move toward healthier lifestyles. When asked if concerns over meeting future healthcare costs have prompted them to adopt a change in lifestyle (such as improved diet and exercise, quitting smoking or reducing stress) 53 percent reported making lifestyle changes, with 12 percent saying they have made “major changes.” These preventative measures transcend age groups, with 45 percent of those in their 30s having made health and lifestyle changes to reduce future long-term healthcare costs.

On the other hand, 28 percent of those surveyed with household income over $175,000 made such changes, compared to 51 percent those earning $100,000 to $150,000.