Healthcare Costs in Retirement

healthcare costs in retirement blog gretchen stangier certified financial planner portland oregon

American workers are split about 50/50 when asked if they are confident they will have enough money to pay for medical expenses in retirement.

In a 2015 survey, 42% of all workers reported they were “not too” or “not at all” confident they would have enough money to pay for their medical expenses in retirement. Fifty-six percent said they were “very” or “somewhat” confident they could pay the cost.¹

Regardless of whether you’re confident or not, it’s important to have an idea about how much healthcare may cost in retirement. By putting the costs in better perspective, you might be able to better understand what you can pay for and what you can’t.

Healthcare Breakdown

A retired household faces three types of healthcare expenses:

  1.  A household may have the expense of 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.
  2. The household should expect to pay for co-payments related to Medicare-covered services that are not paid by Medigap or other health insurance.
  3. The retired household should expect to pay for dental care, eyeglasses, and hearing aids, which are typically not covered by Medicare or other insurance programs.

It All Adds Up

According to a HealthView Services study using more than 50 million actual cases, a healthy married couple, age 65, can expect these healthcare expenses to add up to $267,000 over their lifetime. If you include dental, vision, co-pays and out-of-pocket costs, the total rises to $395,000.²

For a healthy 55-year-old couple who plans to retire in a decade, the number jumps to $464,000.³

 Should you expect to pay this amount? Possibly. Seeing the results of one study may help you make some critical decisions when creating a strategy for retirement. Without a solid approach, healthcare expenses may add up quickly and alter your retirement spending.

Out-of-Pocket Healthcare Cost

The cost of health care for a 65-year-old couple is projected to increase with age.

healthcare cost in retirement gretchen stangier certified financial planner portland oregon

Prepared for the Future?

Workers are asked how much they have saved and invested for retirement – excluding their residence and defined benefit plans.

healthcare cost retirement gretchen stangier certified financial planner portland oregon

¹ Employee Benefit Research Institute, 2015 Retirement Confidence Survey

²′³ CNBC, March 27, 2015

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