Healthcare has the potential to be extremely expensive in retirement, even with original Medicare insurance. Here is what you need to know!
In a 2022 survey from the Employee Benefit Research Institute, 35% of all workers reported they were either “not too” or “not at all” confident that they would have enough money to pay for their medical expenses in retirement [1]. Regardless of your confidence, however, being aware of potential healthcare costs during retirement may allow you to understand what you can pay for and what you can’t.
Health-Care Breakdown
Even though Medicare Part A often comes with no premiums for those who qualify, a retired household usually faces three types of healthcare expenses.
- The premiums for Medicare Part B (which covers physician and outpatient services) and Part D (which covers drug-related expenses). Typically, Part B and Part D are taken out of a person’s Social Security check before it is mailed, so the premium cost is often overlooked by retirement-minded individuals.
- Copayments related to Medicare-covered services that are not paid by Medicare Supplement Insurance plans (also known as “Medigap”) or other health insurance.
- Costs associated with dental care, eyeglasses, and hearing aids – which are typically not covered by Medicare or other insurance programs.
It All Adds Up
According to a HealthView Services study, a 65-year-old healthy couple can expect their lifetime healthcare expenses to add up to around $597,389 before accounting for inflation [2]. Should you expect to pay this amount? Possibly. At the bare minimum, seeing the results of one study may help you make some critical decisions when creating a strategy for retirement. It can help you realize just how much you might want to prepare to spend on healthcare in retirement because without a solid approach, healthcare expenses may add up quickly and alter your retirement lifestyle.
Are You Prepared for the Future?
Workers were asked how much they have saved and invested for retirement – excluding their residence and defined benefit plans [3]. 19% said they had less than $1,000 saved, and roughly one-third had less than $25,000 saved. Furthermore, two-thirds said they had less than $250,000 saved for retirement. While we may not be able to predict the exact amount you’ll need for healthcare expenses in retirement, we can help you prepare in the event that you’re forced to confront large bills.
To learn more about healthcare costs and solutions that can help you save for retirement, please contact us! You can reach SoundPath Retirement Strategies at (425) 365-0204 for both our Bellevue and Mountlake Terrace, Washington offices, or at (702) 840-4592 in Las Vegas.
Sources:
- https://www.ebri.org/docs/default-source/rcs/2022-rcs/rcs_22-fs-1_confid.pdf
- https://hvsfinancial.com/wp-content/uploads/2022/03/HVS-Data-Report-Brief-0312222.pdf
- https://www.ebri.org/docs/default-source/rcs/2022-rcs/rcs_22-fs-3_prep.pdf?sfvrsn=e5c83b2f_4
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as financial, tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.
