Healthcare costs often represent the largest retiree expense. Additionally, healthcare costs are increasing at a rate faster than the CPI (inflation). One 2016 study found that a healthy retiring couple would need $275,000 for out-of-pocket medical expenses over the course of their retirement. Creating awareness around healthcare costs is a critical goal.¹
A retiree needs to ask three questions:
- How much money do I need?
- How much money can I withdraw?
- How long will my money last?
On average, someone needs to hear a message seven times before they take action. That’s why constant communication is so important. Healthcare cost calculators can also play an important role.
Five steps participants can take are:
- Control what they can;
- Make a ballpark budget;
- Determine if they’ll receive retiree health insurance;
- Explore health savings options; and
- Set aside funds in a retirement account.
Participants pay more for healthcare under the following scenarios:
- If they retire early;
- As they age; and
- If they are single