Health-care costs are a top retirement fear, and thats even though many older workers vastly underestimate how much theyll have to pay.

Americans even those who have diligently saved for their golden years are not prepared for the reality of health-care costs in retirement and dont really understand how Medicare works, says John Carter, president of Nationwide Financial Distributors.

Nearly half of affluent Americans, who have at least $250,000 in household assets, say they are scared that rising health-care costs will deplete their retirement savings, according to a Harris Poll released today by Nationwide Financial.

And 43 percent of the affluent older workers dont know how much they will spend for health care in retirement, the survey says.

The pre-retirees who expect health care to be their biggest retirement expense estimated that their average annual health care cost will total $5,621. But that is a drastic underestimate. Citing a 2011 Fidelity study, Nationwide says out-of-pocket health care expenses will average as much as $10,750 a year.

One big reason is that pre-retirees often wrongly assume that Medicare covers the cost of long-term care, Carter says. That is a wake-up call that Americans need good financial advice to prepare for their future health care costs, he says.

There are a lot of things that are not covered by Medicare, such as most eye care, dental and hearing, says Henry Bud Hebeler, a former Boeing executive who developed the retirement planning website analyzenow.com. Ive had to have two pairs of hearing aids so far, and they cost me over $5,000 each time, says Hebeler, 78.

People also dont realize that Medicare will be financed partly by premiums deducted from Social Security checks, Hebeler says. Depending on a retired couples income, their annual Medicare cost could be over $9,000 a year, he says.

Last month, a government trustee report said that Medicare will be exhausted by 2024 and Social Security by 2033. That reality is forcing many workers to plan to work longer. This year, 57 percent of workers who have $50,000 to $250,000 in household assets plan to push back their retirement, citing health care costs as their top financial concern, up from 36 percent in 2011, says Bank of Americas Merrill Edge report.

Nobody gives workers a clue about the rising cost of health care, Hebeler says. Its incredible how many have no idea whats coming at them.

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