Retirees spend more than a third of their Social Security benefits on out-of-pocket medical costs, on average, according to a new study by the Center for Retirement Research at Boston College.
Even after factoring in other sources of income, medical spending still took a huge bite – 18% – of seniors’ total retirement income.
A 65-year-old couple retiring now will need $315,000 to cover out-of-pocket health care costs during retirement, according to a study by Fidelity.
The news gets even worse, however, because these numbers do not include the cost of nursing home or home health care.
That can range from $60,000 a year for home health aides… to over $95,000 a year for a semi-private room in a nursing home, according to the Genworth 2022 Annual Cost of Care Survey: Costs Continue to Rise Across All Care Settings. And if you prefer a private nursing care room, you’ll have to cough up almost $108,000 a year.
Ignore the likelihood of needing long-term care services at your own peril: At least 70% of people over age 65 will require long-term care services, and more than 40% will need nursing home care, according to the U.S. Department of Health and Human Services.
Based on the average cost of a nursing home room and the average length of stay – which is 2.8 years – you would need over $250,000 to cover a single stay.
Many people don’t realize that Medicare does not pay your long-term care expenses, which are now increasing at nearly three times the U.S. rate of inflation.
Simple Math Reveals You’ll Need Over $500,000 in Retirement – JUST to Cover Health Care and Long-Term Care Expenses…
And that’s almost four times more than the typical couple nearing retirement has saved in their combined retirement accounts, according to the latest Federal Reserve Survey of Consumer Finances!
The reality is that most people – and most financial planners – budget little or nothing for out-of-pocket medical expenses and long-term care expenses when planning how much money you’ll need in retirement.
But ignoring the reality of these expenses doesn’t make them go away.
These Expenses Are the Single Biggest Risk You Face in Out-Living Your Money
But there are several steps you can take to avoid being blindsided by this very real risk…
- Increase the amount you save each year by at least 1-2% – you won’t feel the pinch, but you’ll be surprised by how much your savings will grow
- Save more where your money is guaranteed to grow every single year, even when the market is crashing – the Bank On Yourself safe wealth-building method has never had a losing year in more than 160 years
- If you’re age 60 or older, consider the benefits of a “Bank On Yourself for Seniors Plan” – a little-known plan that comes with a long-term care benefit included at no additional cost, in most states. It even covers home health care, which many seniors prefer, for up to 3 years
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