Health Care Costs In Retirement

Health care costs in retirement are a HUGE concern for soon-to-be retirees and current retirees alike.

You can’t blame folks, actually, as so much ink has been spilled about the costs retirees face for health care.

Fidelity Health Costs In Retirement Study

Fidelity does a study each year that purportedly shows retirees need $260,000 to fund their health care costs.  “Oh no, honey, we don’t have that kind of money!!! What are we going to do???” (Give Fidelity more money to invest of course!)

Why doesn’t Fidelity also how much retirees need for food, housing, auto insurance etc…? If we use the same logic, we’d say retirees need to have $500,000 or more for housing costs in retirement and another $500,000 or so for food because both of these are higher on the list of retirement expenses for the average American.

Preying on fears of bankruptcy?

No one says that though. Why? Because it wouldn’t scare the way saying people will go bankrupt due to health costs does. For some reason, that fear has taken over for many retirees. And unfortunately, that fear has also kept those same retirees from actually enjoying their retirement out of fear of running out of money.

These retirees, and I’ve spoke to many of them in my career, see their future selves as paupers, eating Ramen noodles, having to move in with their kids.  So, to try to avoid that fate, they take minimum out of their accounts and live much more frugally than is required.

Missed Opportunity To Enjoy Retirement

This saddens me greatly because I can’t tell you how many widows, mainly, I’ve spoken to that have more money than they know what to do with but no one to share it with. Their husband has since passed, and now they’re in their mid 80s and not as sprite as they once were.

Their regret is not have doing more when they were younger and the hub was alive. That bothers me. It bothers me even more when the tax man comes knocking to claim an even bigger share of THEIR money because as you know widows pay MUCH more in tax than married couples.

EBRI Health Costs In Retirement Study

So along comes this study from the Employee Benefits Research Institute. This study shows the ACTUAL out of pocket expenses retirees have from a conducting interviews of over 8,000 participants every two years since 1993.

Lo and behold, what we find is the majority of these people had little to no out of pocket expenses. In fact, other than a tiny percentage of retirees most have very little expenses.

Hmmm… Could There Be A Reason To Frighten People?

Why this study hasn’t received more attention is beyond me, well I am a natural cynic, so I think I know. The investment firms, and the insurance industry, doesn’t want you to breathe easy when it comes to your retirement money. Fear is a great motivator to get you to buy the stuff they sell.

Before you part with your hard-earned money though please look a bit at your situation. Are you a woman with longevity in your bloodline? That is the person most at risk for major out of pocket expenses.

Consider All Your Options

You may want to consider some options to protect against those risks.

However, for all others, men and women alike, think twice before buying something expensive that offers protection against a risk that is not likely to matriculate and maybe consider ways to actually enjoy your retirement instead of constant worry.


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