Health Care in Retirement

Presented by David Corwin

In 2012, men reaching age 65 had an average additional life expectancy of 17.8 years, while woman reaching age 65 could expect to live an additional 20.4 years on average. While estimates vary, a couple retiring at age 65 without private health insurance from a former employer can expect to pay significant out-of-pocket health care costs during their retirement years. For example, estimates show that a 65-year-old couple who retired in 2013 needs about $220,000 to cover medical expenses throughout retirement, a 38% increase from the $160,000 first estimated for those retiring at age 65 in 2002. This estimate applies to retirees with traditional Medicare coverage and does not include costs of dental care, long-term care or over-the-counter medicines. About one-third of individuals that turned 65 in 2010 needed at least three months of nursing home care, 24% more than a year, and 9% more than five years. The national median daily rate in 2013 for a private room in a nursing home was $230, an increase of 3.6% from 2012. The average length of a nursing home stay is 835 days. At a median daily rate of $230, an average nursing home stay of 835 days currently costs over $192,000.

With all those statistics in mind, the rising cost of health care in the United States has become one of the primary risks to a financially secure retirement. While lower (than in 2012), this year’s estimate is still daunting for many retirees, and it will consume a considerable amount of a couple’s retirement savings. It is extremely important that health care costs are factored into retirement savings strategies today so that retirees can be prepared to pay their medical bills throughout retirement. With health care costs expected to continue increasing faster than inflation, the time to plan for your future health care needs is now… before you retire.

Your ability to enjoy a financially secure retirement can be enhanced by planning for future needs such as:

  • Long-Term Care Services
    • Are you familiar with the variety of long-term care services available?
    • If it becomes necessary, what type of long-term care services would you prefer?
    • How will you pay for any needed long-term care services?
  • Advance Directives
    • Have you communicated your medical care wishes in the event you suffer a catastrophic medical event?
    • Have you named someone else, a spouse or family member, to make medical decisions for you in the event you are incapacitated?
  • Paying for Health Care in Retirement
    • Do you know what your out-of-pocket health care costs might be after you retire?
    • Are you aware that Medicare, while it covers many health care costs, has significant limitations?
    • Are you familiar with the various types of insurance that can help pay health and long-term care costs not covered by Medicare?
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