Health Care Costs In Retirement

The Concern About Rising Health Care Costs

As inflation continues to rise, it impacts the cost of goods and services across all industries. The Consumer Price Index has been frequently used for estimating retirement costs, including health care costs, in financial planning.  However it is no longer a reliable reference for medical costs, which have almost doubled by comparison to the other items in the index. To make matters worse, the Medicare Trust Fund, which pays for hospitals, nursing facilities, home health, and hospice services under traditional Medicare and Medicare Advantage plans, is projected to become insolvent by 2026.

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Without reliable Medicare coverage or a plan that properly accounts for inflation, you'll have to tap savings or liquidate other valuable assets to take care of medical costs in retirement. And with a subject as complex as health care, it’s easy to overlook important features of your plan. It can be expensive and frustrating. For example, there are long-term care services that private insurance and Medicare do not cover. Adequate risk management planning may help to avoid a negative impact to your accumulated wealth. 

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Questions to ask Now:

The sooner you start understanding retirement medical expenses, the sooner you'll start making the right plans. Meet with one of our experts to discuss your unique circumstances and to learn more about medical coverage options based on your retirement goals. For example, understanding what states have the best healthcare options for retirees as a potential relocation strategy, or identifying additional savings or insurance strategies to cover future medical expenses.

It’s important to know how you’ll pay for your medical expenses before your Medicare benefits start. It's also necessary to have your other options ready to fill the gaps not covered by Medicare. 

Frequently Asked Questions

  • Could I Be Underestimating Retirement Health Care Costs?
    People are living longer. While this will likely mean more doctor visits and prescriptions as we age, for many this also means a longer stay in a long-term care community. It’s a big expense year after year. How do you prepare for this? If you have to permanently live in a care facility, how will you cover the costs of your living arrangements in addition to your medical care? Is there assistance for this cost or will it all come from your retirement income and savings?

    Another consideration is whether your income level in retirement will enable you to receive the subsidies offered in the healthcare marketplace.

    You want to avoid shortfalls in covering your retirement health care costs. Now is the time to start calculating and planning for these expenses so you’ll be ready.

  • How Much Does Health Care Really Cost in Retirement?
    Health care costs vary depending on how healthy you are, where and when you retire, and how long you live. In 2021, one might need close to $390,000 saved up after-tax deductions to prepare for retirement medical expenses adequately. The sum will also need to take care of Medicare parts B and D costs. And with costs continuing to rise, that amount will inevitably increase as well. You'll need a solid plan to achieve your estimated retirement health care cost savings - one that starts in earlier in your life.
  • Is Health Care Free for Retirees?

    Medicaid, the nation’s health assistance program, provides free and low premium coverage depending on your income level and assets. It doesn't cover everything or everyone, so take the time to find out what options you’re eligible for and how to pair government and private services to make the most of your health care coverage.

    It's essential to prepare in advance by finding an expert team capable of providing you with the resources and services required in retirement. Ask questions specific to your circumstances and see if your experts can help you make financial adjustments to cushion your retirement medical expenses.

    Don’t wait until you’re retired, start preparing now so you’ll be able to pay for the best health care available in your retirement years.

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