One of the few factors of our retirement years that we can’t predict with any reasonable degree of accuracy is the cost of our medical treatment. This is true even if we’re on Medicare.
The excellent columnist for the Dallas Morning News, Pamela Yip, recently wrote a good article on this subject. I recommend the entire article. Here are the opening paragraphs:
Of all the scenarios you have to consider when contemplating your financial future, health care costs are the hardest to predict. After all, who can say with certainty whether you’ll be hit with a major health problem.
But this much is for sure — people are living longer, and that means they will have to factor health care expenses into their retirement planning.
“Our biggest concern is that people aren’t putting enough money away,” said Mark McClanahan, certified financial planner at Robertson, Griege & Thoele Financial Advisors in Dallas. “They’re not taking enough risk and they’re not properly planning for medical expenses and other personal expenses at retirement.”
Because people are living longer, the way they plan financially for their older years has changed, said Schott Miller, a wealth adviser at Merrill Lynch in Fort Worth.
“My focus used to be on managing money because they [clients] wanted to see how much they could leave to their heirs,” he said. “Now, the focus is far more on making sure that there’s enough money there to cover our living expenses and our health care costs for the period of time that we live.”
You can see why.
In 2009, health care accounted for 18 percent of expenses for people 85 and older, 15 percent of expenses for people ages 75–84, and 12 percent for people ages 65–74, according to the Employee Benefit Research Institute.
So not surprisingly, health problems are the No. 1 retirement worry, according to a recent study by Merrill Lynch and Age Wave, a communications company that focuses on the aging population.
Seventy-two percent of those surveyed ranked serious health problems as the biggest worry about living longer, according to the report.