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[IWS] EBRI: LESS HEALTH SAVINGS NEEDED FOR MEDICARE ELIGIBLE & IRA ASSET ALLOCATIONS IN 2011 [10 October 2013]
IWS Documented News Service
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
Employee Benefit Research Institute (EBRI)
October 2013, Vol. 34, No. 10
“Amount of Savings Needed for Health Expenses for People Eligible for Medicare: More Rare Good News,” and “IRA Asset Allocation, 2011” [10 October 2013]
[full-text, 24 pages]
Amount of Savings Needed for Health Expenses for People Eligible for Medicare: More Rare Good News
- In 2010, Medicare covered 62 percent of the cost of health care services for Medicare beneficiaries age 65 and older, while out-of-pocket spending accounted for 12 percent, and private insurance covered 13 percent. Individuals can expect to pay a greater share of their costs out-of-pocket in the future because of the combination of the financial condition of the Medicare program and cutbacks to employment-based retiree health programs.
- Because women have longer life expectancies than men, women will generally need larger savings than men to cover health insurance premiums and health care expenses in retirement post-65 when examining needed savings regardless of the savings targets. In 2013, a man would need $65,000 in savings and a woman would need $86,000 if each had a goal of having a 50 percent chance of having enough money saved to cover health care expenses in retirement. If either instead wanted a 90 percent chance of having enough savings, $122,000 would be needed for a man and $139,000 would be needed for a woman.
- Savings targets declined between 6 percent and 11 percent between 2012 and 2013 for a person or couple age 65. For a married couple both with drug expenses at the 90th percentile throughout retirement who wanted a 90 percent chance of having enough money saved for health care expenses in retirement by age 65, targeted savings fell from $387,000 in 2012 to $360,000 in 2013.
IRA Asset Allocation, 2011
- Individual retirement accounts (IRAs) are a vital component of U.S. retirement savings, representing more than 25 percent of all retirement assets in the nation. A substantial portion of these IRA assets originated in other tax-qualified retirement plans, such as defined benefit (pension) and 401(k) plans, and were subsequently moved to IRAs through rollovers.
- In the entire EBRI IRA Database in 2011, 44.4 percent of the assets were in equities, 10.7 percent in balanced funds, 18.0 percent in bonds, 13.0 percent in money, and 13.8 percent in other assets.
- Male and female IRA owners had virtually identical allocations to bonds, equities, and money. However, males were more likely to have assets in the “other” category, while females had a higher percentage of assets in balanced funds. For IRA owners above age 25, the percentage allocated to money and balanced funds decreased as the age of the owner increased, while bond allocations increased with age.
Press Release 10 October 2013
Estimated Savings Needed for Retiree Health Continues Drop
Press Release 10 October 2013
“Extreme” IRA Allocations More Likely Among Younger Workers With Smaller Balances
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