According to the Kaiser Family Foundation, the average person covered by Medicare has out-of-pocket medical expenses in excess of $5,400 a year. Premium costs accounted for 42% of the total, while long-term facility costs, medical supplies, prescription drugs, and dental care claim most of the rest of the costs.
With healthcare expenses in the spotlight, it’s incumbent upon us to make sure our retirement strategy anticipates these costs.
But that’s not enough.
Remember, healthcare coverage (including Medicare) typically does not cover extended medical care. And it’s a prospect we shouldn’t overlook.
The Administration for Community Living estimates that about 60% of people will need extended care at some point in their lives.
These annual costs can range widely based on geographic location and the type of care required. An assisted living facility will cost over $80,000 per year in Alaska. In Oklahoma, in would cost around $46,000 a year. When workers were surveyed, only 15% said they were “very confident” they would have enough money to pay for extended care in retirement.
Finally, you may want to consider a Medigap policy, which may help cover some of the healthcare costs not covered by Medicare.
Making sure that you are properly insured for your medical costs may help strengthen the foundation of your retirement.
1. Kaiser Family Foundation, November 4, 2019 (Based on 2016 data, which is the latest available.)
2. Administration for Community Living, January 4, 2021
3. Genworth Cost of Care Survey, 2021
4. Employee Benefit Research Institute, 2020
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