Health Care During The Retirement Years

There is one bill you will have after age 65, and at this point in time, it’s going to cost you almost $250,000. Do you have that much saved for health care expenses during your retirement years? If not, you’re not alone.

A Fidelity Retirement Health Care Cost Estimate found that health care costs for retirees went up $25,000 per person in a 12 month time period. Based on these estimates, an individual retiring today at age 65 will need $245,000 just to cover their health care expenses for the next 20 years, assuming they live to age 85. A couple will need $490,000 for health care. That’s before housing, food, utilities, any debt and miscellaneous expenses.

About 40% of Americans rely on Social Security to pay all of their retirement expenses. About 61% over the age of 75 rely on Social Security 100%. But for those who are 47 years or younger, Social Security is scheduled to be obsolete by 2034.

Yet 52% of American households age 55 and older haven’t saved for retirement. Half of them are relying on pensions to carry them through, but on average, the median savings account for households age 55­-64 is only $104,000. Even with standard Medicare footing much of the medical bills, these households stand to blow through their retirement savings in less than 10 years.

To establish the calculation, Fidelity looked at medical deductibles and coinsurance associated with standard Medicare, and Medicare Part D premiums and out­of­pocket costs for drug coverage. They also included certain services excluded by Medicare. The research did not consider over the counter medications or dental services or long­term care.

Financial experts agree there is no magic bullet for building wealth quickly. It requires determination, faith and a commitment to save from every paycheck. Planning early and taking advantage of health care savings also helps build wealth. Economists encourage families to live by the 50/30/20 rules. You should spend 50% of your income on essentials, have 30% for lifestyle choices, and 20% should go directly into savings. As you age, the ratio should focus less on essentials and more on savings (assuming student loan debt, mortgages and car payments are eliminated).

Here are ways you can save on your health care right now, and tuck away the extra dollars into an emergency or retirement account:

Open a Health Savings Account

Along with your monthly savings, you can put a portion of money away into a health savings account (HSA) each month, tax-free. When a medical bill arises, money can be withdrawn from the health savings account to pay for the cost. Health savings accounts can also pay for pregnancy test kits, bandages, eye exams, dental care and more.

Get “Insurance For Your Insurance”

Health insurance medical deductibles are typically thousands of dollars, leaving you exposed to large debt should an accident or critical illness diagnosis occur. Supplemental insurance, which pays cash for bumps and bruises and major medical expenses, helps cover the coverage gap between your first medical bill and when you health insurance actually kicks in to pay for care. With a HealthValues membership, supplemental insurance is available at the $2,500 or $5,000 level.

Look for Discounts

X-­rays, MRIs and surgery costs are expensive and add up quickly. But preferred vendors offer negotiated discounts on imagery and surgery ­ if you know where to look. HealthValues has teamed up with Save on Medical to provide members access to lower cost care, and the option to schedule an appointment and pay online in advance of services or file the procedure through your insurance company.

Use Telemedicine

The next time you or someone in your family is sick, skip the lobby and call a doctor. In minutes you can have a diagnosis and a prescription sent off to your local pharmacy, all for free. As a member of HealthValues, telemedicine services through Teladoc are completely free.