In a 2023 survey, 37% 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. 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.1
Health-Care Breakdown
A retired household 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 one study, the average 65-year-old couple can expect to need $315,000 saved to cover healthcare expenses in retirement.2 Should you expect to pay this amount? Possibly. While this figure is based on averages, seeing the results of the study can help you make critical decisions when creating your retirement strategy. Without a solid approach, healthcare expenses may add up quickly and alter your retirement spending.
Conclusion
As healthcare costs continue to rise, it’s essential to incorporate them into your retirement planning. While Medicare helps cover many healthcare expenses, it doesn’t cover everything, and out-of-pocket costs can add up quickly. By understanding the potential healthcare expenses you may face, such as premiums, copayments, and costs for services like dental and vision care, you can make more informed decisions about how much to save. At SHJ Wealth Advisors, we make sure to discuss the potential medical costs that may need to be accounted for in your retirement plan. Please reach out to Info@shjwealthadvisors.com if you would like to find a time to meet with one of our CFP® Professionals and thanks for reading!
- EBRI.org, 2023
- Investopedia.com, October 23, 2023
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as 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. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.
