Video: The high cost of retirement

By Anne Thompson Chief Financial Correspondent
NBC News
updated 10/27/2005 7:40:09 PM ET 2005-10-27T23:40:09

Just five years after she stopped working, Barbara Wilcox's retirement has hit a sour note.

Though she has health insurance from the company she worked for for 20 years, each year it costs her and her husband more in higher premiums, co-payments and out-of-pocket expenses — even though they don't have any major health problems.

“It's been very hard to anticipate these needs,” says Wilcox, “the needs for health care expenses.”

They spent less than $1,000 the first year. This year they expect to spend more than $5,000.

They are just two of millions of American retirees being asked to pay more.

A Kaiser Family Foundation survey of companies with retiree health care coverage found:

  • 79 percent raised retirees’ premiums.
  • 53 percent increased co-payments or coinsurance for prescription drugs.
  • 37 percent hiked deductibles.

“The trend,” explains Sylvester Schieber, the director of benefits consulting for Watson Wyatt, “is ultimately that these benefits are going away.”

Schieber works with some of America's best known companies to develop retirement plans. For future retirees, he says the picture is grim.

“If,” says Schieber, “you are looking at current retirees and you believe you are going to get the same benefits they have gotten, you are likely to be surprised.”

In your future, experts say, is the prospect of paying more and getting less — if your company offers retiree health care at all. Seventeen years ago 66 percent of large companies did.  Today, only 33 percent do. That means you need to save a lot more.

“By the time you’re 65,” says Dr. Paul Fronstin of the Employee Benefit Research Institute, “you will need to save $160,000 just to cover the premiums to supplement your Medicare coverage.”

And that doesn't include your out-of-pocket expenses.

The changing workplace is forcing retirees, current and future, to recalculate what they need.

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