Retirement Expenses That Can Make You Cry

You did your best in planning your retirement, and ensure that you did it perfectly so that you will have a comfortable life during your golden years. But just as you thought that you have laid out everything well, there’s still room for risks and failure. But what would that be?

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Financial planners said that having a bad portfolio is not the reason that will most likely make your retirement fail, it is the retirement expenses that you should look out for! How you manage your income and expenses are totally different stories before and after you retire. Before, when your paycheck arrives, you pay the bills and make decisions as to what you will do with the remainder. Part of it might go to your savings and some parts of it to your hobbies or other expenses. It is easy as that. But during retirement, the whole scenario will change. Of course, there’s this freedom of not having to report to an employer, and you’ll become your own boss. But this freedom has great responsibilities. Since you don’t have an expected monthly paycheck, you will have to manage your entire savings and make sure it will sustain you throughout the retirement. The complicated thing about is that, as you shrink your savings and make all efforts to make it last,  an unexpected expense strikes – healthcare.

medications and money

Paying for healthcare expenses has been and will always be the most critical issues of retirement. Most people today will live longer, that means there will be long years to enjoy life, but that could also mean that you will need more money to sustain your healthcare and daily needs. Take note that healthcare costs are rapidly rising, with increments of two and a half times the rate of overall inflation, estimating how much you will need the entire retirement is very difficult. So, what should you do about it? How do you plan for this retirement expenses?

The Numbers

69% of baby boomers and 66% of retirees estimate their health care costs in retirement to be $100,000 or less. But those estimates did not meet the findings of Employee Benefit Research Institute that says the average 65-year-old man would need $127,000 in savings, and a 65-year-old woman would need $143,000, to give each of them a 90 percent chance of having enough savings to cover health-care expenses in retirement.

While the result from recent Fidelity investments survey says that a 65-year-old couple that will retire this year will need about $240,000 to cover the future medical costs. The said numbers do not yet include the expensive cost of long-term care. It also does not take into account any costs that you might have when you decide to retire before Medicare takes effect.


estimated healthcare costs in retirement

Estimated healthcare costs in retirement

With the numbers brought about by various studies, it only tells us that the cost of healthcare is expected to continue rising significantly in future years. Fidelity predicts health-care costs will be among retiree’s largest expenses. A lot of people are still unprepared for this reality and are deciding to delay full retirement.

Health Literacy

Health literacy, the capacity of individuals to obtain and understand health information needed to make health decisions. Inadequate health literacy is associated with adverse health outcomes, therefore improving it will help you gain more control over your health and have positive health perceptions and display a preventive health behavior. By improving your health literacy, you will be able to make a sound decision that will more likely have a positive impact on your health, finances and later on during your retirement.

low health literacy effects
Look at life expectancy charts. It will show you the average lifespan of man and woman in the U.S., use this to have an idea how long you will possibly live. Also, don’t forget to consider your own health record and longevity history of your family members as it will tell a more personal lifespan. Knowledge of your family’s medical history could help you plan for a hereditary condition or prevent a serious illness or health event by way of preventive care.

Medicare for healthcare cost

Medicare is the federal health insurance program for people who are 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease. Medicare helps you pay your inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care. It also covers certain doctors’ services, outpatient care, medical supplies and preventive services.

However, despite the coverage that Medicare provides, it is not designed to cover everything or every possible need. It has out-of-pocket costs that can still cause a heavy burden to you. You should know that Original Medicare does not cover prescription drugs, Parts A and B have separate deductibles, there is a 20% coinsurance, for the most part B services, and Original Medicare does not cap your annual out-of-pocket costs.

The Role of Medicare Supplement plan

Since Medicare is not designed to cover all the healthcare needs, you can opt for private insurance to fill in the gaps in your Medicare coverage. You can opt to enroll in Medicare supplement plan, also known as Medigap. This plan will cover what the Original Medicare doesn’t. It helps cover out-of-pocket costs in Medicare Parts A and B. Also, you don’t have to change doctors if you sign up for this plan. You generally can go to any doctor or hospital of your choice. Medigap also has travel coverage which is more convenient if you are fond of going to different places.

It has ten standardized plans. Choose carefully by checking or requesting for a Medicare supplement quotes which provide the information about coverage and prices offered by the different insurance companies.

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To sum it all up, people today should take note of longer life expectancy in relative to their finances. Because of this changes in life expectancy, people face higher healthcare risks that require a more extensive retirement plan. Plans should be made stronger and protected against the crisis that might impact their savings before the actual retirement.

Medicare is there to provide health coverage, and Medicare supplement plans to make it more comprehensive.

Plan and save for retirement and don’t ignore future health care expenses. The sooner you start and develop a holistic retirement plan that includes a special focus on health-care needs, the more secure your financial future can be.

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