VOL. 128 | NO. 21 | Thursday, January 31, 2013
Rays of Wisdom
Dana and Ray Brandon
Count On Rising Health Care Costs
By Ray and Dana Brandon
Ray’s Take Think you have your retirement plan figured out? Here’s a sobering report: Fidelity Investments recently predicted that a 65-year-old couple that retired in 2012 would pay $240,000 for health care over the remainder of their lives. Those are expenses in addition to costs covered by Medicare under existing legislation, which could change.
Typically, Medicare covers just over half of a retiree’s health care needs. Retirees are still responsible for deductibles, some co-insurance costs, dental, vision and long-term care, as well as premiums for Medicare Parts B and D.
All these costs are growing substantially too. That projected health care cost for a 65-year-old couple rose a full 6 percent from just the year before. Imagine that level of increase year after year!
Even with the additional coverage of supplemental insurance, health care costs are substantial. Many retired couples are surprised to realize that their supplemental insurance premiums are their largest regular expense.
While you can cut retirement expenses by living in a smaller home or taking fewer trips, you can’t eliminate necessary medical care. It’s vital to prepare for health care costs that will continue to rise – and be increasingly more important to you as you age.
What can you do? To start, try not to retire until you are fully eligible for Medicare, otherwise you might be spending tens of thousands annually for just basic health care insurance. When you do retire, shop around for different insurance options to supplement Medicare. It might be that the retirement insurance plan offered by your former employer is not the best option available. Even once you’ve picked a plan, review it against other options on a regular basis as coverage and costs can change.
Most of all, be sure to factor rising health care costs into your retirement plans. With longer life spans and cost increases that regularly outpace inflation, you don’t want health care needs to leave you in a precarious financial position.
Dana’s Take While you don’t have any real control over increasing health care costs, you do have control over your own physical condition. If you start your retirement in relatively good health you may be able to avoid some of the costs associated with chronic conditions like high blood pressure or diabetes.
Physical fitness is every bit as important to your retirement years as financial fitness. It could be that investing in a gym or personal trainer now could make a substantial difference in your medical expenses in the decades to come.
Just like saving money, it takes discipline and time to make a real change for the better in your lifestyle. However, it might be even more rewarding: not only is there potential for reducing your health care costs, you’ll also be in better shape to truly enjoy your retirement years.
Ray Brandon is a certified financial planner and CEO of Brandon Financial Planning (www.brandonplanning.com). His wife, Dana, has a bachelor’s degree in finance and is a licensed clinical social worker. Contact Ray Brandon at email@example.com.