Your Retirement Savings and Rising Health Care Costs
Advance Planning Is Critical and May Help Lower Costs, Saving Your Retirement
Rising health care costs and longer life expectancies are a bigger issue now than it was a generation ago. No matter what, medical expenses will likely take a big chunk of everybody’s retirement savings.
Most of us look forward to the time we can shift gears, worry less and enjoy a slower, less stressed pace of life. Imagine that rosy picture for a moment, doing the things you’ve dreamed of doing that you’ve worked hard for. What nice dreams. Now wake up and snap out of la la land. That rosy picture can quickly change and include some sticker shock as retirement nears, especially when it comes to paying for healthcare.
Health care costs have been rising at more than twice the rate of inflation, averaging 6.9% since 1960 according to the Centers for Medicare and Medicaid Services. Retirees now spend almost as much or more on healthcare than they do on food, and if this trend continues, healthcare expenses will become retiree’s second-largest expense behind housing expenses.
Is this a real concern? A recent survey conducted by Fidelity revealed almost seven (7) in 10 people approaching retirement said they were worried about outliving their savings, the effect of inflation, and the cost of medical care.
Planning for rising costs and longer retirement
Dealing with medical and health issues is the least appealing part of retirement, followed by anxiety over personal finances according to a survey of retirees and pre-retirees conducted by The Hartford. How can you meet the obligations of your health? No one wants to budget for illnesses; we’re never going to get sick, right! A 65-year-old couple can expect to pay about $230,000 and above in healthcare expenses during retirement in out-of-pocket expenses not covered by Medicare.
You need to be informed: routine health care costs, including Medicare premiums and co-pays can average $6,500 a year per individual. Wealthier individuals may pay more upwards of $9,000 a year in out of pocket expenses because some aspects of Medicare are means tested.
Also read Manage Health Care Costs