The average 65-year-old retiree can expect to spend $165,000 on healthcare in retirement and this figure does not include potential long-term care costs! That is more than twice the $75,000 that the typical American anticipates spending. Fidelity’s study assumes that retirees are enrolled in Parts A and B of Medicare, which typically cover doctor and hospital visits, and Part D, which covers prescription drugs.
What is Driving Up Prices?
Americans are living longer due to modern medicine and the medical inflation rate has been outpacing price increases in the broader economy. Fidelity estimates that healthcare cost rose by approximately 5% last year. Because of this, we have and will continue to inflate healthcare cost at 5%+ in our Live Well Plan. This is a higher inflation rate than we use for other living expenses.
What Does This Mean To You?
You NEED to include healthcare costs into your retirement plan. We see a lot of couples only include premiums paid but leave off Medigap policies, co-insurance estimates, and deductibles. As this study suggests, we see most families approaching retirement drastically underestimate their future healthcare expenses. Getting your healthcare estimates correct prior to retirement is vitally important to your retirement planning.
Planning for healthcare in retirement can be daunting, and we are of the opinion that you need a bonified expert to help select a Medicare plan that is best for your family. Here at The Price Group, we partner with several Medicare specialists to help our clients select the appropriate healthcare plan once they reach age 65.
Questions on your Medicare policy or your retirement planning? Give us a call.
About the Author
Matt Price serves as a Partner and Managing Director for The Price Group of Steward Partners. He resides in Houston with his wife, Emily, their four children and "Fisher" the family golden retriever. Matt studied at the University of Pennsylvania – Wharton School of Business for his Certified Investment Management Analyst (CIMA®) designation after receiving his undergraduate degree from the University of Tennessee - Knoxville. Over the past 12 years, Matt has helped families make high quality, common sense decisions regarding their wealth and their legacy. Matt firmly believes everyone needs a wealth coach!
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The views expressed herein are those of the author and do not necessarily reflect the views of Steward Partners or its affiliates. All opinions are subject to change without notice. Neither the information provided, nor any opinion expressed constitutes a solicitation for the purchase or sale of any product or strategy. The information provided is for informational purposes only and does not constitute advice or recommendations for any specific individual.
The Medicare specialists that you may work with that partner with The Price Group are neither employees of nor affiliated with Steward Partners Investment Solutions, LLC.
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