Los Angeles, California – Retirement can be an expensive endeavor, with recent surveys estimating the average cost anywhere between $1.5 million to $1.8 million. For many seniors today, a significant portion of these savings is expected to be allocated towards healthcare expenses. The Bureau of Labor Statistics reported that around 13% of a typical senior household’s spending in 2022 went towards medical costs, highlighting the importance of planning for healthcare in retirement.
Health insurance emerged as the largest expense for seniors, with an average cost of $5,277 for households headed by adults aged 65 and older in 2022. This was followed by medical services at $1,142, drugs at $843, and medical supplies at $278. While Medicare covers some of these costs, many seniors opt for supplemental insurance to fill in the gaps, adding to their total healthcare expenses.
It’s crucial for retirees to not underestimate their healthcare needs in retirement. Despite efforts to stay healthy, unforeseen medical issues can arise, and health problems tend to become more common as people age. To adequately prepare for these expenses, individuals should consider both insurance coverage and personal savings.
Medicare serves as the foundation for many retirees’ healthcare coverage, offering a wide provider network and relatively affordable premiums. Adding a Part D plan for prescription drugs or opting for a Medicare Advantage plan are additional options to consider. For those who prefer the flexibility of Original Medicare, a Medigap plan from a private insurer can provide extra coverage for services not covered by Medicare.
Personal savings are also essential to cover out-of-pocket costs in retirement, especially considering the impact of medical inflation. With healthcare costs projected to rise at a faster rate than general inflation, individuals need to save accordingly to ensure they have enough funds to cover their healthcare needs in retirement. It’s advisable to err on the side of caution and save more than anticipated, providing a financial safety net for any unexpected medical expenses.