Retirement Healthcare Costs May Be Higher Than Previously Estimated, Report Says

Retirement Healthcare Costs May Be Higher

Retirement healthcare costs may be considerably higher than previously estimated, according to a new report from the Employee Benefit Research Institute (EBRI).  The report states that a 65-year-old man enrolled in Medicare with a Medigap plan will need to save $166,000 to have a 90% chance of covering his retirement healthcare costs. A 65-year-old woman will need $197,000 due to longer life spans.

Retirement Healthcare Costs are often overlooked by retirees. (Photo: Money)

The analysis entitled, “Projected Savings Medicare Beneficiaries Need for Health Expenses Remained High in 2022”, indicates that retirees will need to save hundreds of thousands of dollars to be 90% certain they can cover their post-retirement medical costs. According to Benefits Pro, these figures climb to $383,000 for some couples.

According to Yahoo, these estimates may still be too low and workers need to focus on finding ways to reduce overall retirement healthcare costs or save up more money to cover their expenses. The rising cost of healthcare is a significant concern for individuals planning for retirement. Most Americans underestimate their healthcare costs in retirement, and this can lead to financial strain later in life. As people age, they are more likely to require medical treatment, and these costs can add up quickly.

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Medicare helps to offset some out-of-pocket costs for healthcare, but it does not cover all expenses. Seniors who opt for additional coverage through Medigap or Medicare Advantage plans may still face financial strain. Furthermore, the EBRI report does not account for the potential costs of long-term care or other expenses not covered by Medicare, such as dental and vision care. These retirement healthcare costs are often overlooked when planning for retirement, and retirees may need to plan carefully for much larger sums as they age and require more care.

Reducing Retirement Healthcare Costs

One strategy for reducing future retirement healthcare costs is to contribute to a health savings account (HSA), which offers a triple tax advantage. The contribution limit for family coverage will be $7,750 in 2023, up from $7,300 in 2022. Working longer can also help workers who receive health benefits postpone enrollment in Medicare Parts B and D, allowing them to continue receiving employer-sponsored coverage while reducing their future healthcare cost needs.

In conclusion, retirement healthcare costs are a significant factor that individuals need to consider when planning for retirement. Workers need to take steps to prepare for these expenses by finding ways to reduce overall costs or save up more money. By doing so, they can achieve a more financially secure retirement and avoid the financial strain that retirement healthcare costs can cause.

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