“Don’t let your clients bank on Medicare in retirement” – BenefitsPRO features article by DataPath Manager


Health Savings Accounts (HSAs) can help pay for health care expenses now, and both health care and other expenses in retirement.

By Candy Darr

Originally Published by BenefitsPRO
May 18, 2022

There was a time when many American workers could anticipate sailing into retirement with profit sharing and investments, pension, Social Security benefits, and Medicare coverage. They felt secure that their golden years would be filled with rest, peace of mind, and few worries about medical bills.

Times have changed. Today, only 15% of private-sector American workers have access to a pension plan. Barely one-fifth of U.S. firms offer a profit-sharing plan. The average 401(k) balance for 64-year-olds is $232,000, with the median balance now less than $85,000.

Financial advisors have long recommended diversification in retirement portfolios. With retirement assistance both less available and less reliable than before, it’s never been more critical to have multiple resources on hand to help assure a successful retirement.

Even Medicare is no longer a cure-all for retirement healthcare needs. Fidelity predicts that an average 65-year-old couple will need about $300,000 in after-tax savings to handle health care costs in retirement – and that assumes they aren’t battling any chronic illnesses.

Pension plans are going … going … gone

American Express began the first U.S. corporate pension plan in 1875. After 20 years of service or reaching the age of 60, workers were guaranteed half of their yearly salary in retirement. Pension plans spread throughout corporate America, and by 1960, half of the private-sector workforce could expect to receive one.

However, by the early 1980s, employer-funded, defined-benefits pension plans began giving way to defined-contribution programs chiefly financed (if not entirely) by employees. Between 1986 and 2016, the number of defined-benefit pension plans dropped by 73%.

Social Security and Medicare are in danger

Trustees of the Social Security Administration’s Old-Age and Survivors Insurance (OASI) Trust Fund estimated in 2021 that, under current law and their intermediate assumptions, the funds used to pay Social Security old age and survivor benefits will become depleted in 2033, and those used to pay disability benefits will run out in 2057. After that point, benefits payments may continue but at only 78% of the scheduled amounts.

Medicare was enacted in 1965 to provide seniors with health insurance. However, unless Congress raises taxes or cuts benefits, Forbes estimates that the main Medicare trust fund will be empty by 2026. As with Social Security, benefits payments are expected to continue, but at no more than 91% of scheduled amounts.

HSAs help pick up the slack…

Read the full article, “Don’t let your clients bank on Medicare in retirement,” on BenefitsPRO.com.

Candy Darr
Senior Manager of Content and Partner Marketing, DataPath, Inc.

Candy Darr is a 15-year veteran of the employee benefits industry and is a former national conference chairperson for the Employers Council on Flexible Compensation (ECFC). As DataPath’s Senior Manager of Content and Partner Marketing, Candy develops educational programming and delivers creative solutions for customers and DataPath as a whole.

For 40 years, DataPath has been a pivotal force in the employee benefits, financial services, and insurance industries. The company’s flagship DataPath Summit platform offers an integrated solution for managing CDH, HSA, Well-Being, COBRA, and Billing. Through its partnership with Accelergent Growth Solutions, DataPath also offers expert BPO services, automation, outsourced customer service, and award-winning marketing services.

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