By Laura Hipshire
THE ERICKSON TRIBUNE
When Leroy McKnight of Haslett, Mich., retired as an hourly employee and union officer after more than 30 years with General Motors Corporation, he assumed his retiree health care benefits would be covered. Wishful thinking.
“People like me worked for 30 years for wages and health care while working and for a pension and health care in retirement,” McKnight says. “They’ve come along and changed that, and it isn’t fair.”
“People are being put in a very difficult situation,” says Paul Fronstin, director of health research for the nonprofit Employee Benefit Research Institute in Washington, D.C. “Most don’t realize how much money it’s going to take to cover what they’ll need for out-of-pocket costs.”
Experts: Plan ahead
Planning for retirement is already tough for many Americans. Financial planners say not enough people consider their health care costs when calculating how much money they’ll need.
Estimates vary, but Fidelity Investments recently said a 65-year-old couple retiring without employer-provided health benefits will likely need $200,000 just to cover medical costs in retirement beyond federal Medicare coverage. Fronstin believes the figure could be $250,000 or more, given the rapidly rising costs of medical care and how long many Americans are living.
Americans who are still working have the ability to accumulate additional funds, but those already retired are put in an arduous situation when benefits they counted on are being cut.
Such is the case for many automotive retirees, whose benefits are being changed under settlements with the United Auto Workers. Companies are asking retirees to pay deductibles and co-pays for the first time.
McKnight is among a group of former auto workers suing in an attempt to get full benefits restored. He says some GM retirees are contemplating going back to work to cover higher medical expenses.