Rising Costs of Healthcare in Retirement

Fidelity does a study every year looking at healthcare costs
in retirement. Did you know the average married couple who retires at age 65
should expect approximately $220,000 in healthcare costs over their retirement
years? While that may seem like a lot of money, surprisingly, this number only applies
to traditional healthcare expenditures and does not include the costs of
nursing homes or long-term care expenses.

The good news is that the average life expectancy will
continue to increase with technological and medical advancements, as seen in today’s
health and longevity among older Americans. The bad news is a recent study
conducted by Genworth states that at least 70% of people over 65 will need some
form of long-term care services and support at some point.
While you may not be concerned at this stage of life about
long-term care, keep in mind that healthcare costs are increasing faster than
inflation at an annual rate of 5.8%. According to Genworth, the average cost for
home care today is around $45,000 per year and the average stay is about 3
years, so you would be looking at around $135,000. Over the course of 20 years,
based on the projected annual growth rate of these types of health care
expenses, this cost could easily be about $400,000. In addition, the average nursing
home care cost today is roughly $90,000 per year and with an average 3 year
stay you would be looking at $270,000. But, 20 years from now, when you may
need care, this number could easily reach $800,000. Do you have money set aside
to pay for these costs?
These are some real numbers, which makes having a long-term
care plan in retirement all the more important for your financial well-being. Having
a healthcare plan is one of the five core components of an effective retirement
plan. If this is a concern to you, I suggest coming in and meeting with one of
our advisors to identify strategies and discuss options that may be available
to you.