The Cost of Healthcare in Retirement

Greetings. I trust that you are well and enjoying life.

For most of us the major expense in retirement that is the great unknown is what the cost of health care will be. We can do forecasting and projections on all other types of expenses and have a pretty good idea, because we can clearly define the cost of what we will need or want to spend. I saw a study recently from Investment News that reported the likely cost of retirement health care in an interesting and revealing way. They showed several reputable sources and what they calculated the likely out of pocket cost to be, based on whether a person is characterized as being a high health care user and unhealthy or low health care user and healthy. Here’s the data.

High health care user unhealthy male – $188,000 plus two years long term care expense.
Low health care user healthy male – $45,000 plus five years long term care expense.

High health care user unhealthy female – $204,000 plus two years long term care expense.
Low health care user healthy female – $45,000 plus five years long term care expense.

It’s interesting to note that out of pocket expenses for both male and female low health care users are the same. Also interesting to note is that for a low health care user they can anticipate greater long term care cost. It stands to reason though because if we take care of ourselves as we age, we likely will require more assistance.

The reason I’m writing about this in a retirement planning blog is simply to remind you of the economics behind taking good care of yourself. We’re all well aware of the obvious benefits of good health some being longer life span, greater mobility, more energy, less stress to name a few, but rarely do we consider the economic benefits of good health or the cost of poor health and we should. Reality is health care provider cost are increasing all the time. Also Medicare premiums are means based now, so there’s no reason to not believe benefits won’t be means based, when boomers are in their major health care need years and making big demands on the Medicare system. Long term care expenses are another potential expense that can be impacted by taking good care of ourselves.

So put some thought into it and for all the right reasons, be deliberate about doing all that you can to live a healthy lifestyle and take good care of yourself. It’s future security and likely money in the bank.

Don’t hesitate to call if you have thoughts on the above or questions about your retirement planning.

Best regards.

Jeff Christian CFP, CRPC

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