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June 26, 2021

Are retiree health benefits on the way out?

According to recent research from Fidelity Investments, roughly two thirds of those approaching retirement say rising health care costs is getting higher on their list of financial concerns (outliving savings and inflation being the other worries).

AdAnd, with people living longer and the number of retirees increasing each year, it seems their their employers feel exactly the same way.

Ten years ago, 62% of employers offered medical and/or dental retiree benefits to new hires. In 2011, that number dropped to 49%, according to Aon Hewitt. And it's likely to go lower still.

Many employers have decided that it makes little sense to provide retirees with the same coverage they enjoyed while working and are now scrambling to cancel, scale back, or somehow cap their soaring retirement obligations.

But that's short sighted, argues Jamie Marcellus, of First Health Care Services of Canada, suggesting that employers look at such benefits as an important recruitment and retention perk in light of an aging workforce.

Long-term care insurance (insurance that pays for home care and/or nursing home expenses), for example, seems to be an increasingly attractive option, he maintains, citing the most recent 2012 Sanofi Canada Healthcare Survey.

The study suggests that expectations are especially high among employees aged 55 and older (69%), and those who work for large companies (67% for companies with 5,000 or more employees).

Employees who work for government are most likely to expect retirement benefits (72%), while non-unionized (39%) and private sector (37%) employees are the least likely.

Where do you fit in? Do you expect to see your workplace benefits follow you into retirement? Has anything changed in this regard recently?

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...