One of the most often overlooked elements in retirement planning is healthcare costs. As you prepare for retirement, it’s crucial to consider not only your day-to-day requirements but also the potential budgetary impact of expenses associated with your medical needs. From routine check-ups to unexpected medical emergencies, money spent can have a significant effect on your overall retirement budget.
By factoring in these costs and planning accordingly, you can help ensure you are adequately prepared for any medical obligations that may arise during your retirement years.
Medical rates can vary dramatically, depending on the types of services you need, your location, and what medical insurance you have. In general, most retirees should plan for annual out-of-pocket health-related expenses totaling between $5,000 to $10,000.
Here’s why you should consider these costs when planning your retirement:
1. You Don’t Know What Services You’ll Need
It is impossible to predict exactly which services you will need over the course of your retirement, but it’s critical to plan for the potential monetary outlays. Common services retirees use include doctor’s visits, prescription medications, vision and dental care, physical therapy, emergency room visits, and hospitalizations.
2. Healthcare Costs Rise Yearly
Expenditures for medical needs tend to increase year-over-year as technology advances and medical treatments become more sophisticated. Be sure to review potential cost increases when budgeting for your retirement. According to the 2022 Kaiser Family Foundation Employer Health Benefits Survey, individual coverage premiums rose 58 percent, from an average of $5,049 annually in 2010 to $7,911 in 2022.
3. Government Programs Often Only Cover a Portion
Medicare is often touted as the solution for seniors’ medical charges; however, it only covers around 60% of medical expenses on average. This means you could be liable for 40% or more of your medical bills.
4. Long-Term Care Costs Can be Substantial
If you or your partner need long-term care, the price tag can add up quickly. According to www.seniorliving.org, the estimated median monthly charge for nursing home care in a private room in Florida is $10,213, which equates to $122,556 per year! Take note to factor this into your retirement planning so you’re not stuck with unexpected medical bills. Long-term care insurance could be a potential solution in helping pay for this type of care.
5. Work with a Financial Advisor
You should consider communicating with a financial advisor when budgeting for your retirement to make sure you’re accounting for healthcare charges – and all other expenses associated with retired life. A financial advisor can assist in creating a tailored plan that meets your specific needs and helps ensure you have the funds to cover any medical bills that might arise.
Retirement planning is no small task, and it’s important to consider all components – including ever-increasing well-care costs. Doing so can give you confidence, knowing you will have the funds for treatments and medications when needed.
If you want to learn more about the best ways to prepare for retirement, contact us today.
At Independent Financial Services, we have professionals who can guide investment strategies, offer tax-efficient savings options, and assist in retirement and business succession planning.
Get in touch with us today to enjoy a comfortable and secure retirement experience!
Material provided by Redfern Media, an independent third party. Raymond James is not affiliated with and does not endorse the opinions or services of Redfern Media.
This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. The information provided does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but there is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.
Long Term Care Insurance Products may not be suitable for all investors. Surrender charges may apply for early withdrawals and, if made prior to age 59 ½, may be subject to a 10% federal tax penalty in addition to any gains being taxed as ordinary income. These policies have exclusions and/or limitations. The cost and availability of Long Term Care insurance depend on factors such as age, health, and the type and amount of insurance purchased. As with most financial decisions, there are expenses associated with the purchase of Long Term Care insurance. Guarantees are based on the claims paying ability of the insurance company. Please consult with a licensed financial professional when considering your insurance options.