Soon-to-be retirees fret that healthcare costs are wrecking retirement, estate plans. Rising healthcare costs and increasing life spans are putting the squeeze on retirees – even those who might have thought they were in the clear a few years ago. Nine of ten U.S. high-net-worth householders worry that spiraling costs of quality health care will detract from their fun in retirement, with just a shade fewer – 89% – reporting that their retirement and estate plans could be derailed altogether by protracted illness, according to a new survey by Northern Trust.

“Our research shows how critical the issue of healthcare costs is to everyone, regardless of income,” says Tom Hines, head of Northern's Financial Consulting Group. “With life expectancies rising, and as many as 30 million individuals expected to reach retirement over the next 10 years and remain in retirement far longer than previous generations, it's imperative that families begin factoring in the additional cost of long- term care, home healthcare or nursing-home care.” Otherwise, he adds, healthcare “costs can rapidly deplete hard-earned wealth and possibly jeopardize estate plans.”

But Northern’s survey of 1,014 households with a net worth of at least $1 million, shows that wealthy Americans see a number of other potential threats to their retirement and estate plans including a declining stock market (85 percent), inflation (83 percent), higher taxes (81 percent) and domestic and foreign terrorism here and abroad.

According to Northern's survey, 74%of affluent pre-retirees plan to draw income from a 401(k) or other employer-sponsored savings plan to fund their retirement, 72% see traditional investments like stocks and bonds held outside retirement plans will be the second most important source of retirement income, and 76% see individual retirement accounts as a third rung in their rertirement-income ladders. Meanwhile 70% plan to use Social Security and Medicare payments for retirement income, although 64% worry that these entitlement programs may be cut back or dry up entirely before their deaths.

Perhaps most surprising, 48% of pre-retiree affluent householders anticipate working either full or part-time when they retire, compared to 22% employment rate for affluent householders who have already reached retirement age.

Chicago-based Northern Northern has 84 offices in 18 U.S. states and 11 locations international offices in North America, Europe and the Asia-Pacific region. On 31 December 2005 it had $2.9 trillion in assets under administration of and $618 billion in assets under investment management. –FWR

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