5 Shocking Facts About Healthcare for Retirees

Healthcare costs are high, and going higher. I think we can all agree on that. And as we get older, those costs will begin to take center stage. Here are 5 shocking facts about healthcare for retirees, courtesy of the folks at ThinkAdvisor:

1: Healthcare costs will eat up a most or all of retirees’ Social Security income.

A recent HealthView Services report said that a 66-year-old couple retiring this year will need 57% of their Social Security to cover total healthcare costs. A 55-year-old couple retiring in 10 years will require 88%, and a 45-year-old couple, 116%. Even with cost of living adjustments, projections are that Social Security will not be enough to offset the rising costs of healthcare.

2: A key cost driver is healthcare inflation in retirement.

That’s right – overall retirement healthcare costs are projected to increase by 7.3% between this year and next year, thanks in part to a 16.1% increase in Medicare Part B premiums. Over the next 20 years, the Centers for Medicare and Medicaid are projecting at least eight years of healthcare inflation between 5% and 7%.

3: Women can expect to pay more for retirement healthcare.

A big reason for this is that women, on average, live longer than men, which means that they’ll naturally spend more on healthcare. And how about this: a healthy 30-year-old woman who lives to age 91 is projected to spend almost $119,000 more in total healthcare costs than a healthy male of the same age who lives to age 87.

4: Healthy Americans can also expect to pay a lot more for retirement medical services.

While annual costs may be lower for someone who’s healthy, that individual’s total lifetime costs will actually be higher than someone who suffers from a chronic health condition because they often live longer.

In fact, a healthy man or woman can expect to pay almost twice as much for lifetime healthcare in retirement than someone who is diabetic. I guess that’s the price we pay for staying healthy.

5: Retirees can face much higher expenses depending on where they choose to live.

Prescription drug and supplemental insurance policies are regulated by states, which approve carriers, which policies they’re allowed to sell, and associated pricing.

To give you an example, there’s a 49 percent difference in supplemental premiums between Hawaii and Massachusetts. 49 percent! So if you’re living in Massachusetts and need another excuse to move to Hawaii, that could make your decision a lot easier!

The bottom line is this – retirement can throw many unexpected costs your way. Being prepared, and having a strategy first, for whatever might happen, is one of the smartest things you can do for yourself and your family.

Information presented should not be considered specific tax, legal, or investment advice. You should always seek counsel of the appropriate advisor prior to making any investment decision. All investments are subject to risk including the loss of principal.

The information provided is based on current laws, which are subject to change at any time. Lucia Capital Group is not affiliated with or endorsed by the Social Security Administration or any government agency.

Social Security rules can be complex. For more information about Social Security benefits, visit the SSA website at www.ssa.gov, or call (800) 772-1213 to speak with an SSA representative. CAA-10422

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