The 800-lb. health care gorilla in the room

Advisers need to talk to clients about saving for health care costs during retirement and earmark those dollars in the portfolio, because Americans drastically underestimate what they'll have to spend, a health care consultant told planners. "Planning for health care costs should be part of everyone's retirement plan," Dr. Sanford Barth said at the National Association of Personal Financial Advisors' national conference in Philadelphia on Thursday. He is a health care consultant and founder of SMB Strategic Health System and Benefit Solutions. The process should begin with a projection of health care costs for each client that takes into account their health, costs in their geographic area, inflation and other factors that a health care actuary can incorporate into an estimate of future medical costs, Dr. Barth said. There's no end in sight for the increasing cost of health care, neither as a nation nor at the personal level, he said. Today, about 18% of gross domestic product is spent on medical care. Americans estimate that they'll pay about $50,000 for medical care during their retirement above whatever Medicare covers, surveys show. Professionals estimate that it will be more like $163,000 for a 65-year-old couple, and Dr. Barth's estimate is actually about $250,000. Anyone 50 and up should be saving for these costs, and can do so through health savings accounts or even annuities, Dr. Barth said. He also recommended that everyone have some provision for dealing with long-term-care needs. And Dr. Barth acknowledged the fact that future expenses depend largely on an individual's personal fitness. "The best way to control health care costs is to stay healthy," he said. "Cheat the medical care system by staying healthy."