You’ve been busy raising your children and saving for college and now you are helping your aging parents! It may be difficult to set aside money for your own future — planning for retirement is tough but figuring out how much money you’ll need for health care is even tougher.
BABY BOOMERS SAY THEY ARE TERRIFIED OF THE UNCERTAINTY:
- Americans are living longer than ever.
- 66% of older Americans suffer multiple chronic diseases (cardiovascular, arthritis, diabetes).
- Rising costs – Health care will likely be your biggest expense during the golden years:
- More out-of-pocket expenses will be required to maintain health care benefits
- Medigap insurance premiums are expected to have double-digit increases
- Number of employee-funded health care steadily decreasing
HOW MUCH DOES RETIREE HEALTHCARE COST?
- A 65-year-old, healthy couple can expect to spend $266,600 over the course of their retirement (estimates range from $240k to $377k!!!).
- Average annual out-of-pocket spending for recurring health care costs: premiums, doctors, etc:
- Age 65+ couple: $7,725
- Age 85+ couple: $28,644
- Not including possible Long-Term Care expenses!
SAVE NOW! GET READY FOR FUTURE HEALTHCARE EXPENSES:
- Health Savings Accounts (HSA)
- IF you have a High Deductible Health Insurance Plan (HDHP) it can be paired with an HSA.
- 2017 Max: $3400 individual; $6750 family.
- Can be saved and invested for future retirement health expenses!
- Tax deductible. Tax free.
- And/or Bump or Max-out your 401k and IRA opportunities!
- And/or, earmark a separate investment fund for “Future Healthcare.”
HOW DO WE KNOW IF WE ARE ON TRACK WITH OUR RETIREMENT SAVINGS?
By age 35: 2 x Salary
By age 45: 4 x Salary
By age 55: 6 x Salary
By age 65: 8 x Salary
Ex: Based on a $50,000 salary:
Age 35: 2 x $50,000 = $100,000
Age 65: 8 x $50,000 = $400,000
SUMMARY: Rule of 10
- Save at least 10% of salary in HSA, IRA, 401k.
- Accumulate up to 10x your salary by retirement.
- Budget at least 10% of your Retirement Income for healthcare!