By now, you have probably heard the news that the cost of healthcare is rapidly rising in the United States. During most years, health care outpaces the general inflation rate. While this impacts young, healthy people to a lesser degree, those who are planning for retirement will see a much larger difference in their budgets.\r
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For the average healthy couple who retired in 2015, estimated health care costs throughout their retirement years will total about $366,600. Of course, that is just an average number; your costs could be less than that figure, or far exceed it.\r
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As if that’s not alarming enough, consider this: Ten years from now, 98 percent of a retired couple’s Social Security checks will go toward their health care expenses. In twenty years – and many of us can expect to live that long – the cost of health care will exceed the average Social Security payment.\r
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It’s no wonder that 63 percent of people older than 50 say that the cost of health care is their number one retirement-related concern. And yet, many people still aren’t adequately factoring the cost of health care into their retirement plans.\r
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So what is the average pre-retiree to do?\r
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Save as much as you can. This probably goes without saying, but it’s important to save all that you can for retirement. Max out your company-sponsored retirement plan contributions each year, and open a health savings account (HSA) if you’re eligible for one. Your HSA allows you to stash even more pre-tax dollars for retirement, and you can use the money for healthcare costs in the future.\r
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Take care of your health now. Quit smoking, cut back on drinking, eat a healthy diet, exercise regularly, and see your physician for preventive care. Fewer health problems means lower bills.\r
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Maximize Social Security. Consider working until your full retirement age, or even beyond it to earn a larger benefit. Each year that you work, you can save more for retirement, and that’s one less year that you will live on your retirement income as well.\r
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Consider long-term care insurance. The cost of long-term nursing care can be prohibitive for most people, and Medicare covers much less than you probably think. This type of insurance can protect you from enormous bills, and protect your spouse who might still need your retirement income for their own living expenses.\r
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Choose the right Medicare plan. Call us for an appointment, and we can review your Medicare options with you. Depending upon your health care needs, one Medicare plan might provide better benefits than another.