The Cost/Savings Gap

Yesterday, I noted a study showing that 43% of working Americans have less than $10,000 in savings. 54% have less than $25,000 in savings. A newly released study helps put these numbers in perspective.

According to a study released by the Center for Retirement Research at Boston College, the average uninsured lifetime healthcare expenditure for a typical married couple age 65 is $197,000. Notice, this is the "uninsured" cost--the cost after Medicare and any supplement have been applied.

Furthermore, if one factors in potential nursing home costs, the typical couple will spend $260,000 with 5% at risk of having to spend in excess of $570,000. Even at the peak of the stock market in 2007, only 15% of US households had $570,000 in total financial assets.

Assuming uninsured costs will be $197,000, and 54% of Americans have less than $25,000 in savings, there is a substantial gap between future costs and resources available to pay. Does anyone really believe that taxes can be increased enough to cover this gap? Even if costs are contained at 2010 levels, an impossible assumption, the gap remains. Neither increased taxes nor cost containment can solve this problem.

Someone will have to decide how much care will be provided to those who cannot pay for their own care. This will be true for both health care and long-term nursing home care. Do you want to be part of a dialogue that tackles this problem head on, or, do you want to wait for Washington to "solve" the problem?