My husband and I spend many an evening discussing world affairs and social issues. The health care crisis is a popular subject. While I will not profess to have the solution to all of our country’s woes, I have come to one important conclusion. Preparing for a financially secure and comfortable retirement is not just about saving and investing wisely; it is about taking care of your physical well being as well.
In a 2010 study, the Bureau of Labor Statistics estimated that the a 65-year-old couple with median drug expenses would need $271,000 to have a 90% chance of having enough money to cover health expenses in retirement (82 for men and 85 for women). This amount includes the Part B premium for physician services and Part D for prescription drugs. Couples with a high level of prescription drug spending could see that number jump to a whopping $371,000!
Medicare currently covers just over 50% of health care expenses. The program does not cover vision, dental or hearing aids, nor does it cover long term care expenses. In addition, health care costs have historically grown at a rate far exceeding overall inflation rate. Some experts suggest you assume a 6% inflation rate when calculating health care expense.
For those of you who are still working, take the right steps to secure a healthy retirement. If your company offers a Qualified High Deductible health insurance plan, you would be eligible to establish a Health Savings Account to start saving for future medical expenses. And think twice before retiring early. Private insurance is expensive, sometimes costing more than $1000 per month for an individual.
If you are already retired, be a prudent shopper for your Medigap policies. Make sure all of your prescriptions are covered, and if they are not, talk to your doctor about an alternative that is covered. And price policies annually, as the prices tend to change yearly.
Lastly, remember that you need to act fiscally and you need to act physically. Eat right, exercise and of course, wear sunscreen.
Tracy Allen, CFP®