Retirees on a fixed income often have a hard enough time making ends meet, often due to a lack of savings. Now a new survey suggests that many retirees – especially those relying on Social Security – are about to be further endangered by another financial threat: skyrocketing healthcare costs that few Americans are prepared to pay.
HealthView Services recently published its 2015 Retirement Health Care Costs Data Report.
The study found that the average expected retirement health care costs for Medicare B, D and Supplemental insurance for a healthy couple retiring this year at 65 years of age will be a massive amount of money – exactly $266,589 in today’s dollars.
For a couple retiring in 10 years at 65, expected costs will jump to $320,996, due to rising health care cost expenses, HealthView reported.
If those figures aren’t bad enough, retirement health care costs are even higher when expected dental, vision, hearing, co-pays and all other out-of-pocket costs are included. Toss in those expenses and total projected retirement health care costs surge to an astounding $394,954 for a couple retiring this year at age 65.
For a 55-year-old couple retiring in 10 years, total lifetime health care costs are expected to be a whopping $463,849.
Sadly, these estimates don’t even include the cost of long-term care services.
“The report demonstrates that health care costs will account for a very significant and growing portion of retirees’ budgets,” said Ron Mastrogiovanni, Founder and CEO of HealthView Services. “The data also shows that Medicare-related costs are only part of the story. Retirees need to plan for health-related expenses not covered by Medicare, and the potential impact of income-based Medicare surcharges.”
HeathView’s data is based on findings from 50 million actual health care cases. The data breaks down calculations of expected average costs for individuals based on a variety of factors, such as age, gender, income and state of residence.
HealthView officials predict health care cost will rise by an annual average of 6%, up from 3.6% in 2014, and well above the CPI increase of 0.8%. This means health care inflation is expected to continue to outpace both CPI and the cost of living adjustments retirees receive from Social Security.
Put another way: the typical Social Security recipient will soon find most of his or her benefits eaten up by healthcare costs.
The average Social Security benefit was just $25,332 in 2014. Based on HealthView’s findings, the average 66-year-old couple retiring this year, who are eligible for full Social Security benefits, will find that total health care costs consume 67% of their lifetime Social Security benefits. For a couple retiring in 10 years at 65, roughly 90% of their lifetime Social Security benefits will be required to cover health care expenses.
Whether you’re 30 to 40 years old, 50 to 60 years of age, or are older and already retired, this study is a wake-up call to start saving, planning, and ensuring you have a Plan B to deal with escalating healthcare costs – now and in the future.