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American's are unprepared for the costs of health care in retirement

American's are unprepared for the costs of health care in retirement

February 08, 2024


When planning for retirement income needs, it is essential to incorporate the costs of healthcare into the calculation. Almost half of those surveyed by Kaiser say they are not confident that they will have the financial resources to pay for the care they might need as they age. Rising medical expenses, including premiums and out of pocket costs, will have a significant impact on needed retirement savings. Almost a third of pre-retirees have no savings for healthcare expenses in retirement, not to mention long term care.

Savings needed for health care cost in retirement

Determining how much money an individual or couple needs in retirement to cover health care expenses is complicated. Among other factors, it depends on the following:

  • age at retirement
  • length of life after the retirement
  • the availability and source of health insurance coverage after retirement to supplement Medicare once eligible
  • health status
  • out of pocket expenses
  • the inflation rate at which health care costs increase
  • interest rates and investment returns

 

Incorporating savings through a HSA(health savings account) or taxable account is a wise more for those who want to be able to fund almost certain expenses. Source Kaiser The Affordability of Long-Term Care and Support Services: Findings from a KFF Survey