Most people look forward to retirement and plan to take it easy and relax. Travel plans often include lots of other fun activities. One thing too often overlooked in retirement plans is the cost of health care during retirement.
Once enrolled in Medicare, seniors often put medical costs out of their minds unless the bills have already started to accumulate. Retired people sometimes joke about how their contact list mostly consists of doctors’ names and their phone numbers. A little unpleasant, but it often becomes true.
The costs of medical care continue to rise rapidly. AARP says that healthcare costs will likely increase about 5 percent every year for the next 30 years, which is an increase that is about twice as much as most other expenses.
On top of that, as seniors age they have a growing need for doctor visits and treatments. Because of this, the costs involved will probably become your biggest bill in retirement.
The Cost of Health Care for Retirees
Once you retire, health care often becomes a part of life. While people enjoy being able to live longer than they did even 15 years ago, it also means that medical bills are higher.Fidelity researched how much medical expenses would cost the average individual and married couples would spend on medical care once they reached 65. Their findings were shocking. They concluded that the average couple would spend $315,000 between age 65 and death. A single person would need an average of $175,500.
The Limitations of Medicare
Although Medicare covers many medical needs, it does not cover them all. Standard Medicare does not cover vision, dental, or hearing. Despite that, these costs alone can be expensive. Drug costs can also be high, even with Medicare Part D.Medicare Advantage Plans
If you want Medicare to cover other specialized services, you must buy additional Medicare plans. An alternative would be to get a Medicare Advantage plan (Medicare Part C), which combines some of the various parts of Medicare into a single plan. An advantage plan also pays for some services that Medicare does not cover.An advantage plan will often provide some free wellness checks and preventive care. It may include free breast exams, colonoscopies, maternal care, supplements, etc.
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Advantage plans vary by state and company. Some companies offering these plans do not make them available in all states. Costs may vary between companies, or they may only require you to pay the Medicare Part B cost. Medicare requires that these plans include all the services Medicare offers—and then some.
Long-Term Care
Medicare does cover some short hospital stays and limited nursing home care. They do not cover long stays or long-term care. Medigap will also not pay for long-term care.LongTermCare.gov says that seniors 65 and older have a 70 percent chance of needing long-term care at some point in their lifetime. This figure includes care at home and care in a facility. It means that only 30 percent of seniors never need this kind of care.
Women are more likely to need it than men because they live longer than men. On average, women may need 3.7 years of long-term care, and men 2.2 years. Some people—20 percent—will need this kind of care for over five years.
The cost of nursing home care can be quite expensive. SeniorLiving says that the average price for a private room in a nursing home is $330 per day, which comes to $10,025 per month. A semi-private room is a little less expensive, with an average cost of $294 per day, costing an average of $8,929 monthly. One year in a nursing home with a private room will cost $120,304, or $107,146 for a semi-private room.
Costs can vary considerably depending on where you live. Location can mean a cost difference of about $14,000. SeniorLiving reveals that the cheapest nursing homes with a semi-private room can be found in Texas at $5,483 per month, to the most expensive in Alaska at $19,267.
Long-Term Care Policies
One of the best ways to prepare for long-term care is to buy a long-term care policy. These plans are not cheap. SmartAsset says these policies will cost an average of $2,200 per year for a 55-year-old man. The premiums depend on your health and age. Financial advisors recommend buying one of these policies when you are 40 or 50.Assisted Living
Besides not covering long-term care, Medicaid and Medicare do not cover assisted living. The cost of living in one of these communities varies with the state. Seniorly states that the average cost is more than $5,000 per month in New England. New Hampshire is the most expensive, costing about $8,428 per month, and Louisiana is the least expensive, costing $2,946 monthly.In-Home Care
When someone needs in-home care, they can relax a little because it is not nearly as expensive as a nursing home. But it still is not cheap. Health.USNews reveals that a home health aide costs about $5,148 monthly. If someone only needs non-medical care, homemaker services are available for about $4,957 monthly.Paying for Your Healthcare Costs
The costs of health care in your senior years can be very expensive. In addition to saving what you can in retirement plans such as IRAs or 401(k)s, you can also put tax-deductible money into a health savings account (HSA). You also benefit from this account because all money withdrawn from the account is tax-free when used to pay qualified medical bills.Ensuring that you have enough money to cover your healthcare costs in retirement begins with putting enough away in retirement accounts or an HSA. Talking to a financial advisor can help you know how to save enough for medical care to give you a more comfortable retirement.
The Epoch Times copyright © 2024. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
