Retirement’s Big Health Care Bill, And How To Tame It

Health care is one of the biggest expenses you’ll have in retirement. Plan accordingly.

How much do you need to budget for health care expenses in retirement?

Spoiler alert: It’s a big number with a lot of zeroes.

According to Fidelity Investments, which has been measuring health care costs since 2002, staying healthy will run the average retiree couple about $9,400 per year, or almost $800 per month.

That means the typical 65-year old couple retiring in 2018 will need $280,000 to cover their health care and medical costs throughout retirement.

And here’s the kicker. That does not include any long-term care needs, like a home health aide or assisted living expenses, which would be extra.

Also extra? Medical costs incurred before age 65 due to an early retirement. (Something to keep in mind: over half of all people surveyed retired earlier than planned, many due to unexpected health issues).

Health care costs can be intimidating. But here’s 4 ways to fight back:

1). Have realistic expectations about what medical and health expenses will cost you in retirement, and plan accordingly. Even with Medicare, you’ll be dipping into your pocket to cover the bills.

2).  Make staying healthy a priority. Exercise, eat well, emphasize preventative care, and stay engaged and positive. An active social network can help keep you in top form mentally and physically.

3). Consider using tax-advantaged accounts like HSAs (Health Savings Accounts) to set aside extra savings for health care expenses with pre-tax dollars. In other words, save more and save smart.

4). If possible, keep working until you’re eligible for Medicare at age 65. And delay Social Security benefits as long as possible to maximize your potential retirement income.

About Mari Adam

Mari Adam, Certified Financial Planner™ and President of Adam Financial Associates Inc, has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!

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