Retirement in the United States is no longer what it used to be. Before, people used to work until age 65 and then fully retired for about a decade with a pension and social security. Nowadays, the life expectancy is longer, people work into their seventies, social security is no longer a guarantee and pensions are almost extinguished. For all these reasons, planning ahead for retirement is critical.
In addition, health care costs have skyrocketed and many have seen their entire retirement fund wiped out because of a health issue.
A study by the Employee Benefits Research Institute estimates that the average healthy 65-year-old couple that retired in 2013 would need around $255,000 to have a 90% change of covering medical expenses throughout retirement. Based on these numbers, it is easy to understand how negatively, health care costs can affect one’s retirement plan.
By 2027, annual medical costs will likely consume more than 60% of the average individual’s Social Security income.
Again, these statistics emphasize how significant health care costs are and how a serious illness can completely derail your retirement plan. In the United States, medical debt is the largest cause of personal bankruptcy. Approximately 70% of Americans who are currently age 65 or older will need some type of long-term care. The average annual cost of a nursing home is currently about $90,000.
In other words, proper retirement planning in the United States cannot be done without health care planning. Anticipating health care expenses is therefore imperative and one needs to plan accordingly.