How to Handle Increasing Medical Costs When Retirement Planning
Let’s begin with one major question:
Why are medical costs on the rise?
Medical costs are rising for a number of reasons, including:
- Increasing demand: As the population ages, the demand for medical care is increasing. This is because older people are more likely to have chronic health conditions that require ongoing care.
- Rising prices: The cost of medical care is also rising due to factors such as the increasing cost of prescription drugs, medical technology, and hospital services.
- Inefficient healthcare system: The US healthcare system is also inefficient, which contributes to higher costs. For example, there is a lot of administrative overhead in the system, and there is a lack of coordination between providers.
Why do medical costs need to be considered when retirement planning?
Medical costs are a major expense for retirees, and they can quickly drain retirement savings. According to the Fidelity Retiree Health Care Cost Estimate, a single 65-year-old retiring in 2023 may need approximately $157,500 saved to cover health care expenses in retirement. An average retired couple age 65 in 2023 may need approximately $315,000 saved.
There are a few things that retirees can do to plan for the rising cost of medical care:
- Get an estimate of your future medical costs. There are a number of online calculators that can help you estimate your future medical costs.
- Make sure you have enough savings to cover your medical costs. You should have enough savings to cover your basic living expenses, as well as your medical costs.
- Consider purchasing long-term care insurance. Long-term care insurance can help you pay for the cost of long-term care if you need it.
- Take advantage of Medicare and other government programs. Medicare and other government programs can help you pay for some of your medical costs.
Ready to Take Action?
With medical costs and health care costs on the rise, long-term care being a need so many retirees need, now is the perfect time to take action and get a plan in place! Work with a Retirement Risk Advisor today!