Before retirement, give baby boomer employees a crash course in Medicare

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For baby boomers, the phrase “I’ll be working till I die,” may provoke nervous laughter because it might actually be true. But it doesn’t have to be.

Aged 55 to 75 years old, many baby boomers have either stopped working or are seriously thinking about retirement. Yet, almost a third of baby boomers have no retirement savings at all, according to a report by the Stanford Center of Longevity. Those that do are still worried about medical costs; 57% of Americans aged 45 and over said healthcare costs are preventing their retirement, according to a TD Ameritrade study of 1,500 individuals. But employers are in a good position to guide baby boomers toward their retirement goals.

“As long as [baby boomers] have been in the workforce, they’re very familiar with the process of signing up for benefits — but Medicare and Social Security are a different ball of wax,” says Kim Buckey, vice president of client services at DirectPath, a Massachusetts-based benefits advisory company.

Buckey spoke with Employee Benefit News about retirement strategies for baby boomers and how employers should help educate them preparing for their post-work years.

What are baby boomers focused on when it comes to retiring?
They’re kind of all over the place, and I say that as a baby boomer. Many of us are still working; many of us will be working till we die. And many of us are struggling with what I think Gen X is facing — we’re something of a sandwich generation, caring for children and aging parents at the same time.

Baby boomers are either retired or working on it. What can they do to ensure their financial security in retirement, and what role do employers play in that?
Now’s a good time as any to learn how to shop for healthcare, and employers can help by educating workers about their options. The No. 1 thing is don’t wait until the last minute. [They should] start thinking as early as possible about when they might want to retire and they should do their research. Decisions about Social Security and Medicare have repercussions in how much you receive or how much you pay in Medicare. The sooner you investigate your options the better off you’ll be.

I think the biggest fear for people is the cost of healthcare in retirement. I believe the estimate for 2019 is like $285,000 for a retired couple. That’s a big chunk of money to set aside, or plan for during retirement. Anything you can do to set aside money to fund that, and the sooner you can start, the better.

With that in mind, what programs should baby boomers invest in?
For many people who have a high-deductible savings account, the HSA is a great way to set aside expenses. The beauty of it is the HSA is tax-free. Not everyone is able to contribute much, but even if you do to the extent you can, that’s fantastic. Even better, if you can get away without accessing healthcare expenses, then great; the money can accumulate interest and when you retire you take it with you.

So employers should make sure to provide HSAs to help boomers save for retirement?
The fact that you as an employee are able to contribute to an HSA, the employer gets tax breaks for contributing on your behalf. Hopefully the employer is contributing a reasonable amount, that’ll really help with your retirement savings. We do an annual report every year and look at benefit plans employers have in place like 1,000 medical plans. A lot of employers who offer HSA don’t contribute to accounts. But at least they’re providing the vehicle.

What else can employers do to help baby boomers plan for retirement? How does education play into it?
The world of Social Security is so different from the world of employer benefits; anything employers can do to put out materials or resources for retirees will be really helpful. I’d even expand to employees working past age 65. There are implications in choosing when to take Social Security, which can have a direct effect in what happens with Medicare. If you are age 65 and still working you can choose whether to take Social Security or not. If you do, you’re immediately enrolled in Part A. The problem is, if you’re already enrolled in a high-deductible plan, it means you can’t contribute to your HSA anymore. It’s one of the little ‘gotchas’ that’s important for employers to communicate to employees.

When should employers approach boomers about retirement strategies?
In an ideal world [employers] should target employees they know are making retirement decisions in the course of a year. They should consider making pamphlets for employees working past 65. and have great interactive tools that can do calculations and help with the decision making process. I’m sure companies have savings plans and have great tools as part of their website.

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Retirement planning Retirement benefits Retirement income Retirement readiness Financial wellness Financial literacy Financial planning