For most of us, the reality of growing older means that medial issues will likely become a more common concern. As a result, health care can become a prominent expense in retirement. Medicare typically serves as the foundation of your health insurance later in life as it starts at age 65. If you retire prior to age 65, youll find insurance coverage to be expensive, with significant potential out-of-pocket costs.

A major category of expenses in retirement

For most, health care expenses become greater as they grow older. According to statistics compiled by the Kaiser Family Foundation, annual health spending for the average woman is $11,694 for those ages 65 and up. This compares to average annual expenditures of $8,343 for those age 55-64, and $5,775 for women ages 45-54. Spending patterns are similar when comparing costs for those different age groups among men.

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At the same time, changes in health care costs in general tend to outpace the standard rate of inflation. According to the U.S. Bureau of Labor Statistics, over the 15-year period ending in 2019, the cost of living for all goods and services rose by 2.0% annually. During that same period, medical services costs rose by an average of 3.5% annually. Rapidly rising health care costs can quickly eat away at your retirement savings as you grow older.

A challenge even with Medicare

The reality is that while Medicare helps make health insurance much more affordable for older Americans, it is far from free. You will pay premiums for Medicare Part B (doctors visits and other care services). In 2020, the base premium for Medicare Part B is $144.60 per month per person, but it could be higher depending on your income level. The premiums typically rise each year. If you choose, Medicare Part D (prescription drug coverage), there is an additional premium, but that should be offset by lower drug costs. You may also choose to purchase a Medicare Supplemental Insurance plan that could add hundreds of dollars to your monthly budget but limit other out-of-pocket expenses.

Steps to take before you retire

Good planning can help you prepare for the challenges posed by medical costs in retirement. Potential steps to address this issue include:

Be sure to consult with your financial advisor to learn more about the potential financial challenges you face with healthcare in retirement and to explore steps you should take today.

Carlos F. Arias,CRPC ,CLTCPrivate Wealth Advisor

Arias &Partners Wealth Advisors A private wealth advisory practice of Ameriprise Financial Services, Inc.

An Ameriprise Private Wealth Advisory Practice

Carlos F. Arias, APMA, CRPC , CLTC, is a Private Wealth Advisor and Business Financial Advisor with Arias andPartners Wealth Advisors, a private wealth advisory practice of Ameriprise Financial Services, Inc. in Berkeley Heights, NJ. He specializes in fee-based financial planning and asset management strategies and has been in practice for 20years.

To contact him, (908) 272-0188 https://www.ameripriseadvisors.com/carlos.f.arias

100 Connell Dr Ste 2300 RM 233 Berkeley Heights, NJ 07922-2737

Investment advisory products and services are made available through

Ameriprise Financial Services, Inc., aregistered investment adviser. Ameriprise Financial Services, Inc. Member FINRA and SIPC.

2020Ameriprise Financial, Inc. All rights reserved.

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Keeping Up With Rising Healthcare Costs in Retirement - TAPinto.net