The rising cost of health care in the United States has become one of the primary risks to a financially secure 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. Here are some things you’ll need to plan for:
Long-term care services: Are you familiar with the variety of long-term care services available? If it becomes necessary, what type of services would you prefer? How will you pay for them? Have you looked into long-term care insurance?
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 other 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?
Did you know:
In 2013, men reaching age 65 had an average additional life expectancy of 17.8 years, while women reaching age 65 could expect to live an additional 20.4 years on average. (Source: A Profile of Older Americans: 2013, U.S. Department of Health and Human Services)
A 65-year-old couple who retired in 2014 needs about $220,000 to cover medical expenses in retirement.
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. Fidelity Investments, for example, estimates that a 65-year-old couple who retired in 2014 needs about $220,000 to cover medical expenses in retirement. This estimate does not include costs of dental care, long-term care or over-the-counter medicines. (Source: 2014 Retiree Health Care Costs Estimate, Fidelity Investments)
At least 70% of people over 65 will need long term care services and support at some point in their lives (Source: 2015 Medicare & You, Centers for Medicare & Medicaid Services)
The national median daily rate in 2014 for a private room in a nursing home was $240, an increase of 4.35% from 2013. (Source: Genworth 2014 Cost of Care Survey, March 2014)
The average length of a nursing home stay is 835 days. (Source: CDC Vital and Health Statistics, Series 13, No. 167, June 2009)
At a median daily rate of $240, an average nursing home stay of 835 days currently costs over $200,000.
If you would like assistance in planning for your health-care needs in retirement, contact you agent or advisor.