The majority of rise in expenditure was due to higher
premium on Medicare Part B. For citizens above the age of
65. It is expected that health care expenditure will remain
high in the coming years. Healthcare system is experiencing
greater cost pressure because of several factors such as
investments that health care providers have to make so that
they are ready when the next pandemic strikes or because of
Studies reveal that most of the citizens underestimate expenditure they will have to make on healthcare upon retirement. This is due to the fact that people fail to understand that when they are on medicare they will still have other bills to pay. In addition retirees they will have to make payment for premiums, prescription drugs, over the counter drugs, and different types of medical devices.
The Effect Of InflationApart from various expenses we also have to consider inflation. For example if expenditure on health care increases at 2% over the inflation rate for next two years then a 55 year old person will have to take care of extra medical expenditure when the person retires at the age of 65. A couple 55 now will be spending over 1 million dollar on health care during their remaining lifetime. This amount would be same as they will receive as social security benefit.
Planning For Health Care And RetirementYou need to be aware of the fact that medicare generally covers around two-thirds of expenditure on various healthcare related services and our personal expenditure is about 12%. This makes healthcare expenditure one of the most expensive expenditures apart from transportation, food, and housing that we have to bear when we retire. So it is a wise decision to be prepared for these expenses.
It is true that physical fitness can be helpful in reducing few of the expenditures on health care. But, but planning for medical cost that we will have to incur over a long life should also be considered.
Few of the things we can do include utilizing tax-advantaged health savings accounts. These savings accounts are a good option. But, they have plans that are high deductible and also carry limits on annual contribution. Second option is increasing your savings by using retirement plans. If you save more in your early years, you will have better security when you retire. For example, you can add more funds into 401k plan.
The main idea is to start saving earlier. This way you will be better prepared for retirement.