Health care costs are rapidly emerging as a major expense item both before and during retirement. So how can you prepare a budget for health care costs in retirement?
A PERSON’S HEALTH REALLY IMPACTS THEIR RETIREMENT SPENDING.
- Health status: There are controllable and non-controllable factors;
- Impact: Our personal choices impact our health – nutrition, sleep, exercise, stress management;
- Retirement Spending: Ultimately, at retirement, we will have more money in our budget for family, fun, and travel or it will go to healthcare.
RESEARCH ILLUSTRATES HOW HEALTHCARE COSTS IN RETIREMENT VARY A GREAT DEAL BASED ON YOUR STATE OF HEALTH.
Three states of health: Good, Fair, or Poor. Needs vary at each level.
Health Status: Good
- 4 Doctor office visits
- 1 Urgent care visit
- 6 Prescriptions (30-day)
- 1 Vision, hearing exam
- 1 Dental prevention visit
$300: Average annual out-of-pocket costs for Medicare Advantage plan.
Health Status: Fair
- 12 Doctor office visits
- 1 Emergency room visit
- 1 Inpatient admission
- 4 Home health visits
- 24 Prescriptions
- 1 Vision, hearing exam
- 1 Dental prevention visit
$2,000: average annual out-of-pocket costs for Medicare Advantage plan.
SO, HEALTH CARE UTILIZATION JUST INCREASES BY A MULTIPLE FACTOR AS YOUR HEALTH STATUS SINKS.
Health Status: Poor
- 24 Doctor office visits
- 2 Emergency room visits
- 3 Inpatient admissions
- 12 Home health visits
- 72 Prescriptions
- 1 Vision, hearing exam
- 1 Dental prevention visit
$6,000: average annual out-of-pocket costs for Medicare Advantage plan.
Source: MedicareNewsWatch.com
ADVICE TO PRE-RETIREES:
- Age 50s: Get on the treadmill.
- Create a budget line-item for healthcare before you retire.
- Increase your savings!
