Key points
- Medical costs are rising even faster than the rate of inflation.
- Fewer employers are offering health-care coverage for retirees.
- Decisions you make now will affect your future health-care options.
Health-care needs
Nearly everyone near or in retirement is concerned about the cost of health care. In fact, 90% of high-net-worth households are concerned that spiraling health-care costs might affect their ability to enjoy retirement.1
When you consider the fact that we're living longer, this becomes a much greater concern for all, since health-care costs generally increase as we age.
Prepare now for retirement and health-care costs
With medical costs rising faster than the inflation rate, and fewer employers offering health insurance for retirees, preparing for retirement and health-care expenses should be an integral part of any retirement plan.
You can generally plan for 13% of your expenses in retirement to go for out-of-pocket health-care expenses. By 2019, a 65-year-old married couple could need $464,000 to $567,000 for insurance premiums and out-of-pocket medical expenses during retirement.2 Unexpected health-care costs can rapidly deplete savings if you don't have a plan in place to help cover them.
Consider a range of protection and investment strategies
In addition to growing the savings you'll need to cover premiums and other health-care expenses during retirement, there is additional coverage available to help protect your retirement assets. For example, you can add supplemental insurance or long-term care insurance to employer health benefits and anticipated Medicare coverage.
Tips for getting a head start on retirement and health-care expenses
- Contact your Human Resources department to see if your employer provides health-care coverage for retirees.
- Look into Medicare programs and determine which plans are right for you.
- Investigate supplemental health- and long-term care insurance to cover expenses beyond Medicare.
According to the New Retirement Mindscape® study published by Ameriprise Financial, health insurance tops the list of concerns for pre-retirees. Instead of worrying about it, plan for it. An Ameriprise financial advisor can help you protect your retirement from the potential impact of rising and unexpected health-care costs.
1 Source: "Wealth in America" study, conducted by Northern Trust, 2006.
2 Source: Employee Benefits Research Institute (ebri.org) June 2009 Notes. Savings needed for Medigap Premiums, Medicare Part B Premiums, Medicare Part D Premiums and Out-of-Pocket Drug Expenses for Retirement at Age 65 in 2019. Based on couples age 65 in 2019 without an employer-based health plan and with median drug costs who choose to save in the 75 - 90 percentile. Does not include long-term health care costs.
Financial planning services and investments offered through Ameriprise Financial Services, Inc., Member FINRA and SIPC.
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