Average Health Care Costs For Retirees
Healthcare costs for retirees plays a large role in one’s future planning for retirement. Contrary to common belief, medical expenses are the largest financial risk for retirees of which are capable of catastrophic effects to even the “finest” of retirement financial plans. Most people – even those who use trusted financial advisors, counselors and mentors to guide them through the financial planning involved in preparing a retirement plan – are not aware of the impact that health care costs can have on their retirement budget. At Jester Financial Technologies, we know that having an accurate retiree health care costs estimate will greatly improve the odds that you will not out live or run out of money in your retirement.
Do you know as a retiree, or soon to be retiree, your health care costs could be? Most do not, so if you answered “no” know that you are not alone. In fact, a Sunlife Survey “Flying Blind” consumer study 2015, revealed that 92 percent of individuals planning for their retirement had never factored in any healthcare costs into any retirement plan.
Average Health Care Cost Is Likely More Than You Think
So we have established that a mere 1 out of 5 individuals planning for their retirement can accurately estimate their retiree health care cost. A recent study of Americans aged 55 found that those individuals who have begun financial planning and think that they know what to expect in terms of health care costs in retirement, are off by about $300,000. The average out-of-pocket health care expense for a couple retiring today would equate to $4055,000. That is a long way off from what the vast majority believes is an adequate amount to cover medical expenses in retirement – $50,000.
Finding out the hard way that the health care costs in retirement is 7 times what your retiree health care costs estimate was once you have already entered retirement, would likely wreck your odds of financial security in your golden years. Furthermore, it would destroy any savings that you may have hoped to set aside for your spouse or family once you have passed.
Count On Risks Affecting Costs Estimate
During the planning stages of your retirement finances, you are likely concerned about such risks as market declines and inflation. However, as you cross the threshold to a retiree yourself, you can expect that these same risks will amplify and that new ones will begin to emerge – all of which have an effect on health care costs in retirement.
In addition to the already planned for inflation and possible market declines, you can add outliving your savings to the list of risks. However, arguably the most concerning of risks upon entering retirement is health care cost increases. With the cost of health care inflating at over 5.5 percent over the next eight years (according to the “Medicare Board of Trustees”) in addition to the non-inflation, but rather potential decline of Social Security benefits, rising medical expenses should be a real concern to retirees.
As Part Of My Retiree Health Care Cost Estimate Can I Include Medicare?
Medicare is a federal insurance program for those individuals of retirement age – 65 or over. Educating yourself on the different parts of Medicare prior to enrolling will allow you to better prepare your retirement budget and make a more informed selection come time to enroll.
- Medicare Part A: is often referred to as “hospital insurance.” It only covers inpatient hospital stays, some nursing care facilities and some hospice treatment.
- Medicare Part B: is known as “medical insurance.” It covers most doctors’ visits not including specialists (co-pays not included, a deductible must be met) and certain preventative services.
- Medicare Part C: is designated as “Medicare Advantage Plans (MA Plans).” This type of coverage is through a private provider working with Medicare. It combines the coverage of Medicare Part A & B and often includes prescription drug coverage.
- Medicare Part D: is prescription drug coverage.
- Supplemental Coverage: better know as a Medigap Plan, it covers the “gaps” within Medicare Parts A and B, which are often co-pays, deductibles, extension of certain types of coverage and excess charges.
It is important to note that Medicare, though most think that it does, does NOT cover all medical expenses in retirement.
You can apply for Medicare coverage to help pick up some of the burden of medical expenses in retirement during the month of your 65th birthday. You will get a 7 month grace period to enroll before you will be charged a late enrollment penalty. Enrolling any time after the grace period expires will result in higher premiums that will stick with you for the rest of your life.
Use Our Retiree Health Care Estimate Tool To Help You Better Prepare Your Financial Plan
A well thought out and accurately built financial plan will account for risks, long-term care, inflation, decrease in Social Security benefits and health history in retirement. Use our FREE online calculator for reliable illustrations aimed at helping you better secure your financial future in retirement.
What is HealthcareRetirementPlanner.com
Healthcare Retirement Planner (HRP) is a comprehensive solution that helps identify potential problem areas in a retirement plan and design options to minimize the problem.
On an ongoing basis, HRP conducts research and aggregates all data to be used in its analysis algorithm. Pulling from areas such as The Congressional Budget Office, Centers for Medicare and Medicaid, polling individual insurance carriers across the United States along with private research firms, and positions HRP as having the most accurate information and calculations available.
Within the calculation process there are many variables that need to be considered, as the solutions are customized to each individual’s retirement plan. Variables that are required to analyze financial situations include, but are not limited to: age, gender, location, overall retirement income, types of retirement income, inflation and COLA. HRP has simplified this process.
The process of using HRP is straight forward. Simply by answering a few simple demographic questions, entering retirement asset information and income, along with assorted growth rates, you are supplied with a detailed year by year analysis that projects out 20+ years as to how the investors’ current financial plan will be impacted by their Medicare costs and the impact on their Social Security benefit.
Who is Jester Financial?
We are comprised of Financial Professionals, Medicare Specialists, Technology Experts and the foremost authorities on how this one cost will affect your bottom line especially when your health is on the line.
There are many financial institutions that do tremendous work when it comes to asset building, planning for college or creating stock/bond/mutual fund portfolios, but addressing concerns of affording health care costs…well for that, there is us.
Healthcare Retirement Planner was created with one purpose in mind: to provide data, education and tools necessary to help the financial industry create better financial futures and to plan for one of the biggest expenses in not only retirement, but life – their health.
In a time where health costs dominate the media, the political landscape and your bottom line, retirement planning with all of the facts have never been more important.
Origin of Our Data for Healthcare Cost in Retirement
On an ongoing basis, HRP conducts research and aggregates all Healthcare data to be used in its analysis algorithm. Pulling from areas such as The Congressional Budget Office, Centers for Medicare and Medicaid, polling individual insurance carriers across the United States along with private research firms, and positions HRP as having the most accurate Retirement information and calculations available.