How healthcare affects retirement can’t be understated. It costs the average couple over the age of 65 $218,000 for 20 years of medical treatment. Some estimates say more. And that’s not about to get better anytime soon.
According to the Centers for Disease Control, healthcare costs makes up nearly 18% of our GDP. The healthcare industry is having a huge impact on all generations of Americans, but it’s Baby Boomers who are worst off. They have to grapple with the fact that they will continue to require more healthcare as they age. Oh, and most will be doing that on a fixed income.
How much health care affects your retirement very well could determine whether you make it on your own or have to rely on your kids for financial support. Unless you do something now.
Make an effort to cut back on your retirement health care expenses before they even appear. I’m not talking about finding a better insurance plan – I’m talking about making healthy life choices.
- Eat nutritious meals (and avoid junk food)
- Exercise (Shoot for 10000 steps per day)
- Get annual checkups (This becomes more important as you age.)
- Keep up on your oral care
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Maintaining good health before retirement can go a long way in saving you money on healthcare expenses during retirement. Heart disease remains the leading cause of death in the US, followed by other conditions that are impacted by your lifestyle choices, such as diabetes. Some chronic conditions you can’t avoid, but some of them you can. Start making the right choices now to make it happen.
Make a Financial Plan
Staying healthy can only get you so far – you and your spouse will still likely need a lot of medical treatment in old age. That’s why you should make a plan for it.
It’s easy for people to underestimate healthcare costs during retirement, especially when you’re insured through your employer. They’ve been picking up the majority of the tab for your health care expenses for years. But that won’t be the case in retirement.
Map out a worst case scenario for how much money you’ll need in retirement for health care expenses alone. You should also keep in mind that health care expenses overall are expected to grow 5.8% every year through 2022.
What if you or your spouse suddenly needs cancer treatment after retirement? It’s a hard thing to think about, but a reality for many retirees today.
You can take into consideration Medicare benefits as part of your planning, but don’t rely on them too much. The political landscape changes quickly in the US, and your benefits can be affected.
Think Outside the Box
When you calculate the real affect health care has on retirement, most Baby Boomers (even those with a healthy nest egg) see their retirement savings fall short. You may have only a few years left before it’s time to retire, and filling that savings gap with your regular salary isn’t realistic.
Luckily, there are a lot of ways to boost your retirement income to make up for health care costs if you think outside the box. Plan on developing alternative streams of income outside of your salaried job, such as:
Investing in real estate
Starting a side business
Purchasing an existing business
Making other smart investments
Not only will these supplement your pre-retirement income, they can help you maintain the lifestyle you want once you retire.
Healthcare affects retirement, but only if you let it. Think beyond your salary and retirement account to build the financial safety net you need to enjoy your golden years.
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