Are you approaching retirement? Have you developed a projected retirement budget? If not, now may be the time to do so. It’s an important financial tool that can help you manage your spending and preserve your retirement assets. You can use your budget to plan for a wide range of expenses, such as housing, utilities, taxes, travel and more.
One expense that should be included in your budget is health care. Many retirees assume that Medicare will cover all of their health care expenses. The truth is there are many medical expenses that aren’t covered by Medicare. In fact, Fidelity estimates that the average retired couple will spend $275,000 on out-of-pocket medical expenses.1 That figure doesn’t even include the cost of long-term care.
If you’re approaching retirement, you may be starting to think about health care costs after you stop working. Health care is a major source of expenses for many retirees. In fact, Fidelity estimates that the average retiree will spend $260,000 on out-of-pocket costs such as premiums, deductibles, copays and other medical expenses.1
Many retirees assume that government programs like Medicare and Medicaid will cover all their health care costs. That assumption is usually incorrect. Medicare is a valuable resource, but it only covers a portion of most health care costs. Some treatments aren’t covered by Medicare at all.
If you’re planning your retirement, you may be aware of the risk posed by long-term care needs. Long-term care is extended assistance with daily living activities such as eating, mobility and bathing. Long-term care is often provided either in a facility or in the home, and it is usually very costly.
AARP recently published a report on the current state of long-term care. Specifically, it ranked each state by the quality and affordability of care available to seniors. While the scores and information vary by state, there is some information that’s applicable to all retirees, regardless of where they live.