There is a lot of misunderstanding about what Medicare will and won’t pay for retirees’ health care. Your 401(k) plan is a great tool for employees to use to save for these expenses, and the 401(k) meetings are a good time to discuss this topic.
First, employees need to know how much they may need to save for health care expenses. According to Fidelity, the average 65-year-old couple retiring in 2016 is expected to need around $260,000 to pay for their health care in retirement.2 That may be more than your average 401(k) plan participant has saved in total.
By helping employees understand the need, you may be able to motivate them to save more in the plan. AARP has a tool that can help. Their health care cost calculator, What’s Your Magic Number?, allows employees to predict their health care costs in retirement. AARP’s website (www.aarp.org) also includes information to help people understand the costs they may face, ways to save for them, and how they may reduce them by staying healthy.
Tags: 401K, 401k plan, health care, Medicare, retirement, savings