Rising Retiree Health Care Expenses

As mentioned in the Financial Planning section, most Americans fail to recognize the dramatic health care costs they face in retirement.  These include: 

  1. Insurance premiums:

    1. Medicare Part B / Medigap / Medicare Advantage

    2. Medicare Part D (prescriptions)

    3. Dental

    4. Vision

  2. Co-Payments

  3. Co-Insurance

  4. Deductibles

  5. Long-Term Care

  6. Durable Medical Equipment

  7. Hearing Aids

  8. Other non-covered expenses

Surprisingly, Medicare only covers about 51% of your expenses.  Fidelity Investments projects that the average American couple will need $280,000 health care when retiring at age 65.  

The chart shows that this is actually down slightly, but most forecasters are looking at significant increases.  Factors that will impact medical inflation:  

  1. Increasing Longevity

  2. Expensive Medical Advances

  3. Defensive Medicine Practices

  4. Lack of Transparency in Medical Billing

  5. Rising Prescription Drug Costs

Source: US Census

Further, there are strong economic and political indications that Medicare benefits may be cut and your costs increased in the years to come in order to maintain solvency. 

Ultimately what this means is that you should anticipate spending significant sums for health care in retirement.  We understand that this is disheartening.

But BAA wants to help you take control of these costs.  The best retirement strategy contains a specialized investment vehicle that directly addresses them.  This means joining the VEBA.