Since health insurance doesn’t cover everything, and with the growing cost of health care, you can easily drain your retirement savings if you don’t plan well for health care.

The Employee Benefit Research Institute recently outlined how much individuals and couples will need to budget for health care in retirement. A couple retiring in 2016 with median drug expenses would need $155,000 earmarked for drug costs. With that sum, the couple would only have a 50% chance of having enough money to cover health costs later in life. The need for money is even worse for those in the 75th and 90th percentiles. If that same couple is in the 90th percentile for drug expenditures and wants to have enough after the cost of health care, they would need $270,000. These figures have increased from the previous year, and will most likely continue to climb.

In an ideal scenario, the largest expenses in retirement would be for enjoyment and relaxation like travel but these staggering costs are making it difficult to actually enjoy it. There are several ways to attempt to protect yourself from the increasing costs of health care:

  1. Long Term Care Insurance can help if you qualify to receive benefits. This can save you from relying solely on Medicare, Medicaid, and from the increasing premiums of traditional health insurance.
  2. Take advantage of Medicare.
  3. Open a health savings account. Regardless of how you plan to fund your health care in retirement, saving as much as you can is still the best approach.
  4. Ensure you have a sound <ask Tim or Kareen or Anne what this might be>.
  5. Work hard at maintaining good health. Staying healthy is one of the best investments anyone can make. Cliché as it may sound, but they were right when they said health is wealth. Knowing how much health care could cost you in retirement, staying healthy can definitely help you lower or save up some of that cost.

Staying healthy is a luxury; take smart action on these items to increase your chances of surviving the astronomical costs of health care in retirement. Contact your advisor to help you prepare for the unexpected and have the safety nets that you need.


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
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