FOX – WOFL
If you think health care is costing you big now, just wait until retirement! A new Mayo Clinic study found the vast majority of Americans don’t realize how expensive it will be.
So let’s start with perception. What do people think they’ll spend on health care when they retire?
For many Americans, health care is likely to be among their largest expenses in retirement, but many are underestimating how much they’ll spend. The Mayo Clinic survey found nine out of ten people think they’ll spend 20 percent of their income on out of pocket on medical and dental care when they retire.
While that’s a lot, we’ve found it’s actually more than that!
What you’ll actually spend varies from person to person. The Urban Institute found that people should be ready to spend as much as 30 percent of their retirement income on health care, which can add up quickly. A 65-year-old couple could need about $240,000 to cover medical expenses through retirement, according to a 2012 study from Fidelity Investments.
So Why the disconnect?
A lot of people think Medicare will pay for everything when they retire, and unfortunately that’s just not the case. Medicare covers a lot. But you still have to pay premiums, co-pays, dental, vision, and then there’s what will likely be your biggest out of pocket expense: long term care like assisted living or nursing home. To get an idea of what that costs here in Orlando, click here. You can also compare what the cost of long term care will be in your current location as well as in another state!
How are people making up the difference?
Unfortunately, they’re having to make tough choices. Sometimes it comes at the expense of their health. Walgreens recently surveyed Medicare beneficiaries where one in five said they’d delayed filling a prescription or skipped doses of medication to save money. This is why we work with clients to make sure they don’t have to make those kinds of sacrifices. Click here to schedule a one-on-one consultation with Senior Financial Security.
What can you do? Should you start saving even more for retirement?
While saving more is always a good idea, not everybody can do that. The most important thing is to have a plan. A financial professional can help you with insurance policies that will cover many of the out-of-pocket expenses not covered by Medicare. One option is Medigap insurance, which is sold by private companies, but not everyone is eligible. You should always keep in mind that no single insurance policy will cover everything.
This problem isn’t going away anytime soon, in fact it’s likely to get worse.
Seniors living on Social Security will especially be affected. Social Security has a built in cost of living adjustment of 2.3%, but health care costs are increasing at a rate of about 6% each year. That means the percentage of retirees’ income going to healthcare will nearly double in the next 15 years.
To help protect yourself, and your retirement plans, contact Jean Ann Dorrell today to schedule a consultation by clicking here.
