When looking at your readiness for retirement, don’t forget to consider the increased costs of health care. Most of us figure a flat number that is based on the costs today. If it is not inflated and made to be more reasonable given the dramatic spiraling costs, you may find your dreams for that second home, the cruise in five years, or the college education funds for your grandchildren may need to be abandoned.
This caution is not meant to be a deterrent to those who have health care costs factored into retirement planning, but to remind those who think the costs will equal what you now pay in monthly premiums; the true out-of-pocket costs will far exceed those of the current premiums. For the most part, the upfront deductibles we will all be paying after 65 will be a healthy $5,000 – $7500 per year based on the different tiers of the coverage under Medicare and supplemental policies. The variance may be from one time medical issues which are not lifetime in duration or from top tier drugs which may be the only ones that work for you.
Please review your living expenses in retirement and make sure you have included the minimums stated above for your medical costs. And remember, these costs do not take into account long-term care insurance premiums which can double the number used above.