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Beware the cost of health care in retirement

Financial advisers say their clients are waiting longer to retire, and many people are choosing to retire in stages.

Financial advisers say their clients are waiting longer to retire, and many people are choosing to retire in stages.

“A trend I am seeing is people phasing into retirement, rather than complete retirement all at once, “ said Patrick Velekei, financial planner at Giles Financial Group in Wyomissing. “I am seeing more people transition to part-time employment before totally retiring, which is a big help financially to the retirement plan and a comfortable transition into retirement.”

A recent survey conducted by the Transamerica Center for Retirement Studies found that 57 percent of workers plan to work past 65, and 54 percent of those polled plan to retire but continue to work at least part-time.

Most said they will stay working for financial reasons. Maintaining health care benefits was the biggest concern for 66 percent of respondents, while three out 10 surveyed are going to keep working for enjoyment.

At Great Scott Financial Services in Bethlehem, owner Scott Seymour found that people retiring have put health care expenses on the front burner. A client nearing retirement will expect to pay $14,000-$20,000 out-of-pocket per year per couple during retirement for health care costs, including insurance premiums.

Seymour said he gives clients a comprehensive look at what expenses will be incurred in retirement. Since health care is a primary concern, Seymour gives clients options on how to manage those expenses.

Some ways to handle health care costs include long-term care insurance, a move to a continuing care facility and getting on Medicaid.

He explained that long-term care insurance policies can be too expensive for most people and living in a continuing care facility is not in most people’s budgets.

“It’s a complicated beast to summarize,” Seymour said. “You have to ask yourself how you go from a working person with health care insurance through your employer and retiring with the knowledge that health care will be a cost to you.”

He added that the uncertainty of Obamacare also is putting stress on his clients.

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