The impact that health care costs can potentially have on even the most detailed retirement plan is surprising to many. Most individuals looking toward retirement are unaware of the potential risks associated with neglecting to include health care costs into their retirement plan and therefore it is easy to overlook this seemingly minor budgetary item. In reality, though, health care costs in retirement are anything but minor. In fact, they are the complete opposite. Playing the role of a major factor in maintaining financial security throughout retirement.
Nationwide, Health Care Costs In Retirement Are On The Rise
As if the financial burden of retiree health care benefits were not high enough already, those Baby Boomers entering or nearing retirement have rising costs to add to their list of things to look forward to. Nationwide, health care costs in retirement are projected to rise at a rate of 5.8 percent, according to “National Health Spending Projections Through 2020,” Health Affairs.
Research findings from The Middle Class Security Project shows projections that nationwide, the costs of health care in retirement is estimated to rise from consuming 8 percent of a retiree’s income upon retiring to 18 percent by the time the retiree turns 70.
The good news is that the average American in today’s society is living a longer, fuller life thanks to healthier lifestyle trends. However, the bad news is that with a longer life comes higher prices to be paid and higher spending on health care costs in retirement. According to the Health Cost Institute, the average America couple retiring at age 65 and living 20 years in retirement will need $292,800 for health care spending. Assume this same couple makes it an additional 5 years (not a large feat for healthier seniors these days) and the total cost for health care in retirement skyrockets to a whopping $441,200. Among the unfortunate class who are diagnosed with a chronic illness such as circulatory issues or even cancer – expect a bill closer to $300,000.
Bear in mind that these estimated costs are out-of-pocket costs – prices to be paid after federal Medicare pays their portion of medical expenses. Medicare does not cover long-term care or nursing facilities. So for those who require this sort of treatment should know that a retiree undergoing just 5 years of nursing home care can expect an itemized bill for about $900,000. Make it 15 years and this expense increases to closer to $1.5 million.
Nationwide, Health Care Costs In Retirement Will Be Only Somewhat Covered By Medicare
Contrary to common belief, Medicare does not cover all of a senior’s health care costs in retirement. Perhaps that should be repeated because it is that important that you understand – Medicare WILL NOT cover all of your health care costs in retirement. Got it? Good. It is very important that aspiring retirees understand this, due to the risks associated with not factoring health care cost into a financial retirement budget.
The Employee Benefit Retirement Institute says that as an average American citizen retiring at age 65 and in good health, you can expect that Medicare will cover a measly 51 percent of your health care costs in retirement. That leaves a hefty chunk of out-of-pocket expenses for you to be responsible for. Taking the time to properly educate yourself on the available Medicare plans, what they cover and what they do not will help you to make a more informed decision about your health care plan selection in retirement. Ultimately, selecting a plan that is right for you and knowing such associated nationwide health care costs in retirement, will help you to more accurately plan for your financial future.
Nationwide, Estimated Health Care Costs In Retirement Are Unknown By The Majority
According to a recent study nationwide, estimated health care costs in retirement are generally unknown among those who have completed their financial planning for retirement. In fact, it was revealed that only 8 percent of those Americans who had completed their financial retirement planning were aware of what their health care costs are expected to be.
As one of the largest expenses in retirement and further the expense with the most risk attached it is worrisome that so few understand the urgency of properly accounting for this cost.
We Help Americans Nationwide Understand Health Care Costs In Retirement
Do you have a financial plan for your future? If so, have you considered arguably one of the most important expenses, health care costs, and how it may affect you? Do you have a solid foundation of budgeting to build upon? A good understanding of health coverage options available to you in retirement? If not, that is okay, we are here to help!
Jester Financial Technologies will provide you with the knowledge you need and the tools you require to grasp a firm understanding of what you need to know about medical expenses as a retiree. Use our FREE online calculator for a fast, free and reliable estimate of what you can expect your health care costs in retirement to be. Medical expenses in retirement are often misunderstood, but they do not have to be. Let us help you to better understand your nationwide estimated health care costs in retirement and get yourself on the track to financial security, today.