Much has been said recently about inflation and how it has affected many people’s pockets. One aspect of it that people approaching retirement may not have thought about in their retirement planning is how it can affect your medical care once you have retired. Inflation continues to impact the cost of medicines and professional medical care.
Almost everything costs more now than it did just one year ago. Food prices have been affected considerably and have not returned to the previous rates. Groceries are now 11.9 percent higher, which means your dollar’s buying power is less, and it takes more money just to put food on the table.
Healthcare Costs Must Be Considered in Your Retirement Planning
Saving money for your future health care must be an essential part of your retirement funds. This year, after the new raise in Social Security came out (3.2 percent), it was also revealed that the cost of Medicare increased by 5.9 percent. Already, it means that inflation has begun to outpace the cost of medical insurance.What Some People Are Doing to Lower Their Medical Costs
The most common thing that seniors are doing to reduce their healthcare costs is to avoid doctor visits and treatment. Sometimes, they also have to put off getting needed medications because some of them are very expensive—beyond what they can afford—even with Medicare covering some of the expenses. Doing so could be endangering their health even more.Reducing Medicare Coverage May Not Be a Good Idea
The government sets Medicare prices each year. Some seniors are switching standard Medicare plans to Medicare Advantage plans to reduce the costs of some types of care that Medicare may not cover. Others are dropping supplemental Medicare parts because they do not need it now—or are unable to keep paying for it—and they want a way to reduce their monthly healthcare insurance premiums.Inflation Rates Can Fluctuate Widely, but Are Usually More Stable
Historically, average inflation rates have not been as large as they have been since COVID. In more recent years, the highest inflation rate occurred in 1980, when it rose to 14.6 percent. Discover mentions that the average rate between 1986 and 2020 was 2.5 percent. Unfortunately, there is no guarantee that it will return to that rate.Calculate Your Future Needs With a Retirement Calculator
A retirement calculator that lets you add inflation can help you determine how much you need to save before you retire. Bankrate offers one that enables you to factor in inflation and other information including Social Security. They suggest you prepare for inflation by adding a double-digit inflation rate to your calculations just to be safe.How to Reduce Inflation’s Impact
Whether you are already retired or still have some time before you walk away from your job, there are some ways you can reduce some of the impact inflation could have in your future. The first thing you might want to do would be to delay your retirement—wait until you are 70 or older.
If you are counting on Social Security to provide a good portion of your retirement income, it increases every year by 8 percent and maxes out at 70. Waiting to take it could give you considerably more income each month. Required minimum distributions (RMDs) on retirement accounts are not mandatory until you turn 73.
Another reason you might want to wait until 70 (or longer) to retire is that many businesses do not want to hire seniors. It means that if you retire, you might be unable to find another job to make up the difference financially. Many seniors are now planning to work much longer as part of their retirement plans.
If you have investments, make sure that they are balanced accordingly. Talk to your financial advisor to get them rebalanced according to your age and risk factors. Also, make sure your investments are diversified to better withstand changing inflation rates and continue to grow.
