Health Care Costs in Retirement

Health Care Costs in Retirement

by Mary Suplee on Oct 1, 2018

Health care costs in retirement have so many moving parts it can be difficult to figure out how to get a plan that will provide the coverage you need. The new Vanguard/Mercer healthcare cost model shows that a 65 year old woman has an annual median cost of $5200 per year for healthcare expenses. However, this can vary from $3000-$26,200 per year, depending on a variety of factors.

Getting this right is very important. For example, do you need long-term care coverage? About 50% of people will never have any need to spend money for long-term care. Some of those who do, will need it for a very short period of time and some for an extensive period of time.  Some are able to pay for it out-of-pocket and some people have very little resources and will have to rely on Medicaid. How do you plan for this?

Some of the factors that need to be considered are
•    age at retirement
•    geography
•    Medicare surcharges based on your income
•    employer benefits
•    marital status
•    family history
•    health and prescription drug needs 
•    individual healthcare costs 

Make the best analysis you can with your current information. Use health savings accounts if they're available to you and maximize the benefits in them. Plan for additional expenses for healthcare in retirement and make sure you’re saving towards that goal. And lastly, reassess your personal situation each year and make any changes needed to your Medicare choices and prescription drug plans.

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