Medical Costs Most Worrisome Part of Retirement

Baby Boomers looking at their retirement finances are most concerned about their ability to pay retirement medical expenses, according to a survey by the Insured Retirement Institute. Over two-thirds are concerned, and the younger the boomer the more concerned. Over 70% of those ages 50 to 54 are worried.

They should be worried. The IRI prepared a report estimating that a healthy 65-year-old man should expect to pay $350,000 of medical expenses, including premiums, for hte rest of his life. A female cohort would be 13% more, or $417,000. The average Medicare beneficiary should anticipate annual out-of-pocket medical expenses of $4,300 annually in today’s dollars.

IRI suggests purchasing an immediate or deferred annuity with a guaranteed minimum withdrawal benefit to supplement Social Security income. Another strategy for boomers who already have an annuity or plan to purchase several years ahead of their retirement is to use income from that annuity to supplement a separate investment.

In Retirement Watch we regularly cover retirement medical expenses and how to pay for them. We analyze the details of all the Parts of Medicare, long-term care, and other medical expenses and funding sources. We help our readers find the best options for them to reduce their risks, uncertainty, and out-of-pocket costs.