Factor in Health Care Costs When Planning for Retirement

According to Fidelity Investments, the average 65-year-old couple retiring this year are likely to spend $245,000 on medical care not covered by Medicare — 29 percent more than they did 10 years ago. That figure doesn’t include long-term care, which can run as high as $200,000 a year for a private room in a nursing home. The data from the Employee Benefits Research Institute are even grimmer. A 65-year-old couple who would like a 90 percent chance of having enough money for lifetime health care should set aside $392,000. Health-related costs are rising by twice the rate of overall inflation. The Centers for Medicare and Medicaid project that health spending will grow almost 6 percent a year through 2024. While some aspects of medical care are out of your control, there are a number of steps you can take to make the costs more manageable. First, put health care on your retirement radar. Next, consider a health savings account, known as an HSA. Many employers now offer these accounts, which must be paired with a high-deductible health insurance plan. The money you put into the accounts is tax-free. It grows tax-free and is tax-free when used for health-related expenses.

Source/more: CNBC

David Wingate is an elder law attorney at the Elder Law Office of David Wingate, LLC. The elder law office services clients with powers of attorneys, living wills, Wills, Trusts, Medicaid and asset protection. The Elder Law office has locations in Frederick and Montgomery Counties, Maryland.