Retiree Health Care Costs on the Rise AgainSubmitted by Orange CA Financial Advisor | Sterling Wealth Partners on September 11th, 2017
In our blog series that we published last year - “Health Care Costs – The Storm Cloud Hanging Over Your Retirement”, we discussed the Fidelity health care cost study that the investment company conducts each year. Well, they just released the results of their study for 2017 and those costs have increased another 5.5% from 2016.
According to the 2017 version of the Fidelity Benefits Consulting study, a 65-year old couple retiring this year will need an average of $275,000 (in today’s dollars) to cover basic medical expenses in retirement (excluding the cost of long term care). This is an increase of $15,000 over the 2016 estimate of $260,000.
The costs identified in this study apply only to retirees with traditional Medicare insurance coverage and include typical retiree health care expense like Medicare premiums, deductibles, and co-pays along with Medicare supplement premiums and items not covered by Medicare like dental, vision and podiatry. The estimate does not include the cost or nursing home or other long-term care needs.
"The sticker shock of this estimate hopefully reinforces for many people that they need to act now, regardless of their age," says Adam Stavisky, senior vice president of the Benefits Consulting business at Fidelity Investments. "Rising health care expenses are forcing people to rethink important financial and health decisions now more than ever, ranging from the services they use to the age they choose to retire. Knowing exactly when you'll retire is tricky. Health issues, caregiving duties, or someone's occupation can play a role in your decision to retire," says Stavisky. "Even if you are a very healthy person today, it's critical that you plan well in advance for the considerable cost of health care, by adding it into your overall retirement planning discussions."
Since this is such an important issue during retirement, incorporating health care costs into the retirement income plan is critical. There are many ways to minimize the risks of health care including pre-funding costs, using health savings accounts where available, making good lifestyle choices and transferring risk using insurance. Incorporating a future health care cost “assessment” into the retirement income plan is a critical component of the financial planning process we use with our clients.
If you would like a complementary analysis of your possible retiree health care costs, please contact us to schedule an appointment.
 Fidelity Retiree Health Care Cost Estimate 2017