Retirement Income Toolbox

October 15, 2017

The following is a summary of an article titled “Retiree health costs soar” from Investment News .com June 2017 by Mary Beth Franklin.  I found the information on interest and valuable to pass along.

Health care costs in retirement are rising twice as fast as the average annual increase in Social Security benefits, putting a crucial source of retirement income on collision course with one of the biggest expenses retirees face.  Over time, retiree health-care costs for today’s workers could exceed their gross Social Security payments.

The third annual “Retirement Health care Date Report” projects that lifetime health-care premiums for Medicare Parts B & D, supplemental Medigap insurance and dental insurance for an average age 65-year-old couple retiring this year will be $321,994 in today’s dollars.  When deductibles, copays, hearing, vision and dental out-of-pocket costs are added, total lifetime retirement health-care costs could top $400,000, according to Health View Services, which produces health-care cost-projection software.

While the numbers are eye-popping, HealthView Services CEO Ron Mastrogiovannis says financial advisors should not dismiss them as outlandish or fail to incorporate them into a retirement income plan.

Although these numbers may seem out of reach, the saving required to cover health care when meeting retirement savings goals are often more modest than might be expected, according to Mastrogiovanni.

HealthView projects that the annual retirement health care inflation rate will average 5.47% for the foreseeable future.  That is almost triple the U.S. inflation rate of 1.9% from 2012 to 2016 and more than double the projected Social Security cost-of-living adjustments of 2.6%.

We feel by working with your Financial Advisor closely when planning your expenses, you can help reduce the impact of these increases in the long term.  It’s also important to choose your Medicare Advantage, MediGap and Medicare part D plans to fit your specific financial needs and hopefully avoid paying extra for services you don’t need or use.  We are happy to answer questions and provide guidance in both of these crucial areas.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.