Warning: Health Care Costs in Retirement Are a Trap
Here are some frightening statistics about the impact of health care costs in retirement and their relationship to Social Security benefits:
- The average 70-year old couple will spend $14,554 on out-of-pocket health care costs in 2017. This assumes no extreme illnesses. It will take approximately 40% of this couple’s Social Security benefit to pay for these costs.
- However, in 15 years, this couple will spend $37,393 on out-of-pocket health care costs and this will consume 71% of their Social Security payments.
The increasing gap between health care costs and Social Security benefits is due to the fact that health care costs are increasing at 5%-7% annually and Social Security benefits increase at a much lower pace. This means you will need to plan to spend more of your other assets to pay for health care as you age. Keep this in mind as you think about your retirement.
Note: data is from the HealthView Services 2017 Health Care Costs Report